Bond market cheers RBI OMO purchase plan, bond yields drop 5 bps1 min read . Updated: 24 Apr 2019, 06:27 PM IST
- 10-year bond yield ended at 7.425% compared with Tuesday's close of 7.474%. Yield on bonds due January 2028 fell 6 bps to 7.556%
- While the first OMO purchase worth ₹12,500 crore will take place on 2 May, the date for the second will be announced later
Mumbai: The yield on the benchmark 10-year bond fell five basis points on Wednesday after the Reserve Bank of India (RBI) said it will resume OMO purchases next month. The 10-year bond yield ended at 7.425% compared with Tuesday's close of 7.474%. Yield on bonds due January 2028 fell 6 bps to 7.556%.
Bond yields and prices move in opposite directions.
One basis point is one-hundredth of a percentage point.
On Tuesday, after market hours, RBI announced it would purchase government bonds worth ₹25,000 crore in two open market operations (OMOs) to infuse durable liquidity into India's banking system.
While the first OMO purchase worth ₹12,500 crore will be conducted on 2 May, the date for the second will be announced later, the central bank said.
The announcement came after RBI’s $5 billion forex swap auction on Tuesday drew bids for more than three times the size.
Meanwhile, the Indian rupee—in line with its Asian peers—weakened today as a rising dollar and high crude prices weighed on sentiment. The rupee closed at 69.87 vs the dollar, down 0.34% from its previous close of 69.63.
The currency had opened at 69.76 a dollar today.
So far this year, the rupee has gained 0.02%. During the period, foreign investors bought $7.85 billion in equity and sold $584.30 million in the debt market.
India's benchmark Sensex Index rose 1.27% to 39054.68 points today.
Year to date, it has risen 7.14%.
Bloomberg contributed this story.