Secondary Market
RBI skips screen-based OMO action in Feb post INR 1-tln gilt buys at auction
This story was originally published at 18:20 IST on 7 March 2025
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--RBI did not buy or sell any gilts via OMO in week ended Feb 28
NEW DELHI – The Reserve Bank of India did not buy or sell gilts in the secondary market for the whole of February, at a time when it has bought bonds worth INR 1 trillion through open market operation auctions since Jan. 30. Data released Friday for the week ended Feb. 28 showed the central bank was absent from the secondary market for the fourth straight week, after buying INR 388.15 billion worth of gilts through its screen-based operations in January.
The bond market has been keenly tracking data from Clearing Corp. of India Ltd. for cues on the RBI's purchases in the secondary market. For the week ended Feb. 28, the 'others' category--a segment that comprises insurance companies, provident funds, and the central bank--net bought gilts worth INR 58.92 billion in the secondary market, up from INR 8.52 billion the previous week. With the central bank on the sidelines, traders said the data likely reflected the activity of life insurers.
While the RBI refrained from secondary market activity, it continues to buy gilts through auction. It conducted three OMO auctions in Jan-Feb totalling INR 1 trillion, the last on Feb. 20, and on Wednesday announced another INR 1 trillion worth of OMO buys split across two auctions in March. The auctions will be held on Wednesday and Mar. 18.
The central bank has been infusing liquidity since the second half of January after its heavy dollar sales in the foreign exchange market to prop up the rupee led to a significant tightening in rupee liquidity. This exacerbated the tightness following the advance tax payments made in December.
In addition to its OMO purchases, the RBI has conducted multiple long-term variable rate repos and dollar/rupee buy/sell swap auctions in addition to daily fine-tuning operations. It is scheduled to conduct a $10 billion, three-year dollar/rupee buy/sell auction on Mar. 24. End
Reported by Aaryan Khanna
Edited by Ashish Shirke
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