Mumbai, April 29 (IANS) The Reserve Bank has decided to inject more liquidity into the banking system through the purchase of Government bonds for an aggregate amount of Rs 1.25 lakh crore in May.
The move is also expected to prop up bond prices, which had declined due to a sell-off by foreign banks and primary dealers after the uncertainty triggered by the Pahalgam attack.
The RBI’s open market operations (OMO) to purchase government bonds will be carried out in four tranches between May 6 and May 19.
The decision was taken after a review of current and evolving liquidity conditions, according to an RBI statement.
The move comes close on the heels of the RBI’s announcement on April 1 to buy government bonds worth Rs 80,000 crore, which was followed by another Rs 40,000 crore purchase announced on April 11.
RBI Governor Sanjay Malhotra has stated that the central bank will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions.
The bond purchases are in continuation of the RBI’s recent measures to inject liquidity into the system. In March, it conducted OMO purchases of government securities worth Rs 1 lakh crore in two tranches of Rs 50,000 crore each.
The central bank also held a dollar-rupee buy/sell swap auction of $10 billion for 36 months. Besides, the central bank this week reduced borrowing costs by cutting the benchmark repo rate by 25 basis points and changing its neutral stance to accommodative. The steps were taken as part of the soft money policy to spur economic growth, as the inflation rate has come down.
According to financial analysts, the fresh liquidity infusion is also expected to help fetch a better price for the new benchmark bond, which would be auctioned on May 2.
The RBI announced the new bond after the old benchmark bond completed the outstanding amount of Rs 1.84 lakh crore.
–IANS
sps/svn
Disclaimer
The information contained in this website is for general information purposes only. The information is provided by BhaskarLive.in and while we endeavour to keep the information up to date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
In no event will we be liable for any loss or damage including without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever arising from loss of data or profits arising out of, or in connection with, the use of this website.
Through this website you are able to link to other websites which are not under the control of BhaskarLive.in We have no control over the nature, content and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorse the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, BhaskarLive.in takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
For any legal details or query please visit original source link given with news or click on Go to Source.
Our translation service aims to offer the most accurate translation possible and we rarely experience any issues with news post. However, as the translation is carried out by third part tool there is a possibility for error to cause the occasional inaccuracy. We therefore require you to accept this disclaimer before confirming any translation news with us.
If you are not willing to accept this disclaimer then we recommend reading news post in its original language.
