Business Standard ·
Economy, business and finance
RBI absorbs ₹50,000 crore through bond sale amid liquidity surge
The central bank sold Rs 50,000 crore of government securities in the first of three OMO tranches planned for September to absorb surplus liquidity from the banking system.
The Reserve Bank of India on Thursday sold ₹50,000 crore worth of government securities through an open market operation (OMO) sale auction as it makes efforts to drain durable liquidity from the banking system.
Market participants said demand was robust despite the cut-off price being higher than expected. This was the first of the three OMO tranches announced last week to suck out ₹1 trillion this month.
Some banks preferred buying bonds at current levels over parking funds through the central bank’s variable rate reverse repo auctions, they said.
“Demand was good, but the levels were higher than expected. We saw some selling initially after the cut-off came in. Then the crude suddenly collapsed, followed by some short covering in the later part of the day,” said a dealer at a primary dealership.
The yield on the benchmark 10-year government bond settled at 7.05 per cent, flat against the previous close.