 "RBI auctions bills worth Rs 22,000 cr check volatility")
Mumbai: The Reserve Bank today sold short-term bonds worth Rs 22,000 crore to check volatility in the forex market by sucking out liquidity.
This is the first tranche of cash management bills to be auctioned after the RBI last week said it would sell Rs 22,000 crore of short-term bonds every Monday.[caption id=“attachment_1027891” align=“alignleft” width=“380”]
The RBI logo. Reuters[/caption]
Bills with maturities of 34 days and 35 days of Rs 11,000 crore each were put up for auction, RBI said in a statement.
The Rs 11,000 crore auction of 35-day cash management bills maturing on 17 September 2013, was fully subscribed. The result of the auction for the remainder will be announced on Tuesday.
The sale was conducted using the multiple price auction method. The cash management bills will have the generic character of treasury bills, it said.
The auction of the bills is a part of a continuing effort to arrest the slide in the rupee, which hit a record intra-day low of Rs 61.80 against the dollar last week.
The decline of the rupee to the previous record intra-day low of 61.21 against the dollar on 8 July forced the RBI to take a series of unconventional measures to curtail liquidity and curb speculation.
On 15 July, the RBI put in place measures to restore stability in the forex market, including raising the marginal standing facility and bank rates to 10.25 percent and curbing access by way of repo window to Rs 75,000 crore.
The central bank also conducted open market sales of government securities of Rs 2,500 crore on 18 July. As a contingency measure, it opened a dedicated special repo window for a notified amount of Rs 25,000 crore for liquidity support to mutual funds that face redemption pressure.
On 22 July, the RBI rationalised gold imports by making it mandatory on all nominated banks to ensure that at least one-fifth of the imported metal is exclusively made available for exports.
A day later, the RBI directed banks to draw only 50 percent of their total deposits in overnight borrowings and maintain a 99 percent average cash reserve ratio everyday.
PTI