RBI to buy Rs 360 billion worth of bonds in October to ease liquidity

Since mid-September, the RBI has conducted two OMO purchases, infusing Rs 200 billion, to ease liquidity pressure

The Reserve Bank of India (RBI) on Monday said it would buy Rs 360 billion worth of bonds from the secondary market in October to meet the durable liquidity needs and the seasonal growth in currency in circulation observed in the build-up to the festive season. The auctions will be conducted during the second, third, and fourth weeks of October.

This advance intimation of open market operations (OMO), along with last week’s relaxation of the liquidity coverage ratio by 2 percentage points, infused the much-needed support for the bond market. The yields on the 10-year bond closed below 8 per cent