Operation Twist-III: RBI buys, sells bonds worth Rs 10k crore each

Sarkaritel
By Sarkaritel January 7, 2020 06:47


New Delhi, Jan 7 The Reserve Bank of India (RBI) on Monday bought Rs 10,000 crore of three long-term securities while selling the same amount of three short-term bonds in the third special open market operation in three weeks.

It got bids worth Rs 64,505 crore for the three bonds but choose to accept only Rs 10,000 crore of bids under the OMO purchase auction. It got 198 bids for 7.32 per cent-2024 but accepted 12 bids and for 7.27 per cent-2026 bonds, received 163 bids but accepted only two.

The RBI received 224 bids for 6.45 per cent-2029 security but accepted only 22 bids.

It offered to sell four government securities-6.65 per cent-2020; 7.80 per cent-2020; 8.27 per cent-2020 and 8.12 per cent-2020 through OMO sale.

These securities were offered by the central bank in the previous two OMO sale auctions too. It received Rs 47,540 crore of bids but accepted to sell Rs 10,000 crore of bids.

In terms of number of bids, the RBI received 26 bids for 6.65 per cent-2020, 40 for 7.80 per cent-2020 and 35 for 8.27 per cent-2020 but accepted 7, 3 and 4 bids, respectively.

For 8.12 per cent-2020 bond, it received 41 bids but did not accept any of them. In the previous two similar auctions, the RBI had purchased Rs 20,000 crore and sold Rs 15,326 crore of bonds.

These special OMO auctions are similar to the US Federal Reserve’s Operation Twist aimed at faster transmission of policy rates.

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

The RBI had announced to simultaneous purchase and sale of government securities (G-Secs) under open market operations (OMOs) for Rs 10,000 crore each last week.

Sarkaritel
By Sarkaritel January 7, 2020 06:47