Home / News / India /  Operation Twist-III: RBI buys and sells bonds worth 10k crore each

Mumbai: In the third special open market operation in as many weeks, the Reserve Bank of India (RBI) on Monday bought 10,000 crore of three long-term securities while selling a same amount of three short-term bonds.

The RBI had announced to simultaneous purchase and sale of government securities (G-Secs) under open market operations (OMOs) for 10,000 crore each, last week.

Like last week, though the RBI offered to sell four securities in the auction, it accepted bids for three bonds. In the current OMO purchase auction, the RBI offered to purchase three securities including 10-year benchmark government bond, as against just one bond in the previous two auctions.

It got bids worth 64,505 crore for the three bonds but choose to accept only 10,000 crore of bids under the OMO purchase auction.

It got 198 bids for 7.32 per cent-2024 but accepted 12 bids and for 7.27 per cent-2026 bonds the RBI received 163 bids and accepted only two bids.

The RBI received 224 bids for 6.45 per cent-2029 security but accepted only 22 bids. It offered to sell four government securities-6.65 per cent- 2020; 7.80 per cent-2020; 8.27 per cent-2020 and 8.12 per cent-2020 through OMO sale. These securities were offered by the RBI in the previous two OMO sale auctions. It received 47,540 crore of bids but accepted to sell 10,000 crore of bids.

In terms of number of bids, the central bank received 26 bids for 6.65 per cent-2020; 40 for 7.80 per cent-2020 and 35 for 8.27 per cent-2020 but accepted 7, 3 and 4 bids, respectively.

For 8.12 per cent-2020 bond, it received 41 bids but did not accept any of them. In the previous two similar auctions, the RBI had purchased 20,000 crore and sold 15,326 crore of bonds. These special OMO auctions are similar to the US Federal Reserves' Operation Twist aimed at faster transmission of policy rates, an analyst said.

The RBI has reduced the repo rate by 135 basis points between February and October 2019 but there has been a delay in passing on the cut in repo rate by lenders.

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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