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Informist, Tuesday, Dec. 23, 2025

 

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--RBI announces measures to manage liquidity conditions 
--RBI: To buy INR 2 tln of govt bonds at OMO auction in 4 tranches 
--RBI: To buy INR 2 tln of govt bonds at OMO auction in 4 tranches Dec-Jan 
--RBI: To hold 3-year dlr-rupee buy-sell swap auction of $10 bln on Jan 13
--RBI: To buy INR 500 bln of gilts at OMO auctions on Dec 29, Jan 5
--RBI: To buy INR 500 bln of gilts at OMO auction on Jan 12, Jan 22 
--RBI: Will continue to take measures to ensure orderly liquidity conditions
 

 

NEW DELHI – The Reserve Bank of India will buy INR 2 trillion of government bonds through open market operation auctions in four tranches across December and January, it said in a release Tuesday. The central bank will also conduct a three-year, dollar-rupee buy-sell swap auction on Jan. 13 for $10 billion.

 

The RBI will buy gilts worth INR 500 billion each on Dec. 29, Jan. 5, Jan. 12 and Jan. 22. Detailed instructions for each auction will be issued separately, it said.

 

"The Reserve Bank will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions," the release said.

 

Latest data showed the RBI's net liquidity injection into the banking system – a proxy for the liquidity deficit – was INR 548.52 billion on Monday, slightly lower than INR 577.21 billion on Sunday. Net durable liquidity was in a surplus of INR 2.60 trillion as on Nov. 28, the lowest since early May. 

 

The RBI had already taken measures to improve durable liquidity since then. The last tranche of the cash reserve ratio cut for banks freed up around INR 650 billion of durable liquidity on Nov. 29. Following up on measures announced on Dec. 5, the central bank has also bought gilts worth INR 1 trillion in two equal tranches on Dec. 11 and Dec. 18 as well as conducted a three-year dollar-rupee buy-sell swap worth $5 billion on Dec. 16.

 

On the other hand, durable liquidity has been under pressure due to the RBI's efforts to support the rupee. The central bank is estimated to have sold as much as $8 billion in the spot market last week alone to bring the rupee back to under 90 a dollar, after it hit a record low of 91.08 a dollar. A glut in dollars in the banking system at the year-end has pushed up the one-year dollar-rupee forward premium to an over three-year high, which will also be tempered by the RBI's buy-sell auction.

 

Banking system liquidity has also been crunched due to seasonal outflows in the form of advance tax payments mid-December and goods and services tax payments since Saturday. To manage overnight rates and frictional liquidity, the RBI has already conducted eight variable rate repo operations in the fortnight beginning Dec. 15. Currently, outstanding VRR operations as of Tuesday have injected INR 2.31 trillion of liquidity into the banking system.  End

 

US$1 = INR 89.65

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Aaryan Khanna

Edited by Vandana Hingorani

 

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