RBI buys Rs 10,000 cr of long-term securities, sells Rs 2,950 cr of short-term govt bonds in fourth special OMO

  • Last week, the RBI had said it will simultaneously purchase and sell government securities under open market operations (OMO) of Rs 10,000 crore each

  • These special OMO auctions are similar to the US Federal Reserves' Operation Twist aimed at the faster transmission of policy rates, an analyst said

  • RBI has reduced repo rate by 135 basis points between February and October 2019 but there has been a delay in passing on the cut in the repo rate by lenders

Mumbai: In the fourth special open market operation (OMO) auctions, the Reserve Bank of India on Thursday bought Rs 10,000 crore worth of long-term securities and sold Rs 2,950 crore worth of short-term government bonds.

Last week, the RBI had said it will simultaneously purchase and sell government securities under open market operations (OMO) of Rs 10,000 crore each.

In the OMO purchase auction, the RBI received bids worth Rs 26,887 crore for two types of securities -- 7.32 percent-2024 and 6.45 percent-2029 -- but accepted only Rs 10,000 crore of bids.

For 7.32 percent-2024, it got 157 bids and accepted 40 bids. The RBI got 147 bids for 6.45 percent-2029 bonds but accepted 105 bids.

 RBI buys Rs 10,000 cr of long-term securities, sells Rs 2,950 cr of short-term govt bonds in fourth special OMO

Representational image. Reuters.

The cut-off yield for 7.32 percent-2024 was 6.408 percent, while for 6.45 percent-2029, it was 6.5780 percent.

The RBI offered to sell two government securities -- 7.80 percent-2021 and 7.94 percent-2021 -- through the OMO.

It received Rs 35,375 crore of bids but accepted Rs 2,950 crore of bids.

In terms of a number of bids, the central bank received 85 bids for 7.80 percent-2021 and 70 bids for 7.94 percent-2021 but accepted 3 and 7 bids, respectively.

The cut-off yield for 7.80 percent-2021 was 5.6714 percent and for 7.94 percent-2021 was 5.7192 percent.

These special OMO auctions are similar to the US Federal Reserves' Operation Twist aimed at the faster transmission of policy rates, an analyst said.

The Reserve Bank of India has reduced repo rate by 135 basis points between February and October 2019 but there has been a delay in passing on the cut in the repo rate by lenders.

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Updated Date: Jan 23, 2020 19:26:23 IST