The central bank today set a higher-than-expected cut-off price of Rs 115.09 at the Rs 5,000-crore auction of 8.35 per cent 2022 government paper.
This effectively translates into a cut-off yield of 6.925 per cent, marginally lower than market expectation of 6.932 per cent. Higher cut-off price than what was anticipated triggered selling in the money market. The newly auctioned 20-year bond was traded at 6.9328 per cent in the evening.
Market participants said the selling of the paper was not fuelled by the lack of liquidity in the system, but rather on market perception that the downside for yields in the immediate term is limited.
There is ample liquidity in the system, reflected by the Rs 15,225 crore accepted by the Reserve Bank of India in today
