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Informist, Friday, Apr. 25, 2025

 

NEW DELHI – The Reserve Bank of India did not buy or sell gilts in the secondary market in the week ended Apr. 18, central bank data released Friday showed. On Apr. 17, the RBI had bought INR 400 billion of gilts through auction under its open market operations, which did not show up in the data as it was settled on Monday.

 

The central bank last bought gilts in the secondary market in the week ended Mar. 21. The RBI has largely stayed away from on-screen purchases since buying gilts worth INR 388.15 billion in January. Since then, the only secondary market purchase was INR 100 million worth of gilts in the week ended Mar. 21. The RBI has bought gilts amounting to INR 3.45 trillion through OMO auctions so far in 2025

 

Of these, the RBI has bought INR 1 trillion through four auctions so far this month, three of which were announced on Apr. 1. The RBI has one more OMO auction scheduled in April on Tuesday. The central bank said it would buy five gilts – the 7.04%, 2029, the 6.10%, 2031, the 7.26%, 2032, the 6.19%, 2034, and the 8.33%, 2036 – at the auction.

 

At the post-policy press conference on Apr. 9, RBI Governor Sanjay Malhotra had said that the central bank aimed to ensure proper transmission of the repo rate to the banking system and economy, and it would ensure a sufficient liquidity surplus in the banking system. In the April policy, the Monetary Policy Committee cut the repo rate by 25 basis points to 6.00% and changed its stance to 'accommodative' from 'neutral'.

 

The central bank began infusing liquidity in the latter half of January after the liquidity deficit in the banking system shot up due to heavy dollar sales by the RBI in the foreign exchange market to support the rupee. This exacerbated the tightness in liquidity following the advance tax payments in December. In addition to the OMO, the central bank announced several measures to infuse durable liquidity, including daily and long-tenure variable rate repo auctions and dollar/rupee buy/sell swap auctions. Since Mar. 29, systemic liquidity has been in a surplus. On Thursday, the net liquidity absorbed by the central bank, a proxy for the systemic liquidity surplus, was INR 1.01 trillion.  End

 

Reported by Aaryan Khanna

Edited by Saji George Titus

 

 

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