RBI did not buy or sell gilts outside OMO tender in 2 straight wks to Feb 14
This story was originally published at 19:29 IST on 21 February 2025
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--RBI did not buy or sell any gilts outside OMO auction in week ended Feb 14
MUMBAI – The Reserve Bank of India did not buy or sell gilts in the secondary market in the week ended Feb. 14, data released Friday showed. This was the second straight week the central bank has not bought or sold in the secondary market after buying gilts worth INR 388.15 billion through screen-based secondary market purchases in January.
Bond market traders have been keenly tracking the Clearing Corp. of India Ltd. data for clues on the RBI's buys in the secondary market. For the week ended Feb. 14, 'Others' – a segment that comprises insurance companies, provident funds and the central bank – bought gilts worth INR 36.82 billion in the secondary market, down from INR 41.60 billion in the previous week.
At the Monetary Policy Committee meeting on Feb. 7, RBI Governor Sanjay Malhotrathe refrained from announcing fresh measures on liquidity but said it would be proactive in infusing liquidity. The RBI has since doubled the size of its second and third tranches of open market operation gilt purchase auctions to INR 400 billion each on Feb. 13 and Thursday.
In the week ended Jan. 24, the RBI bought 208.50 billion of gilts outside auction, the largest such buy since the week ended Feb. 12, 2021. The central bank has been infusing liquidity in the latter half of January after the liquidity deficit in the banking system shot up. There was a significant drain of systemic liquidity over the last two months due to advance tax payment, capital outflows, RBI's intervention in the foreign exchange market, and an increase in the currency in circulation, RBI Governor Sanjay Malhotra had said on Feb. 7. The durable liquidity slipped into deficit in January for the first time in over five years.
On Jan. 27, the central bank announced structured measures to infuse durable liquidity. The RBI announced purchases of government bonds worth INR 600 billion via open market operations in three tranches, which it has since increased to INR 1 trillion. It also announced a six-month dollar/rupee buy/sell swap auction for $5 billion, and a 56-day variable rate repo auction for INR 500 billion.
The RBI also conducted a 49-day variable rate repo auction on Feb. 14 for INR 750 billion and a 45-day auction on Friday, where it accepted all INR 579.51 billion bids. The RBI on Friday announced it will hold a $10-billion dollar/rupee buy/sell swap auction on Feb. 28 for delivery after three years. End
Reported by Srijita Bose
Edited by Saji George Titus
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