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Market's response to RBI’s OMO programme on expected lines: Shaktikanta Das

08 Jan 2020 Evaluate

RBI Governor Shaktikanta Das has said that the market's response to the Reserve Bank of India’s (RBI) third round of simultaneous purchase and sale of government securities under the special open market operation (OMO) is on expected lines. He noted that the objective of the programme is to moderate high long-term interest rates in the market by changing the yield curve.

Das has stated that the RBI has so far carried out three rounds of what is called as 'Open Market Operations' under the programme. In the third special OMO, the RBI offered to purchase three securities including 10-year benchmark government bond, as against just one bond in the previous two auctions. The RBI got bids worth Rs 64,505 crore for the three bonds but choose to accept only Rs 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 Rs 47,540 crore of bids but accepted to sell Rs 10,000 crore of bids.

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