RBI gets nearly double the bids in Rs 20,000-cr market purchase
Mumbai: The central bank's
bond purchases
through
open market operations
(OMO) on Tuesday saw strong demand, with banks and primary dealers offering bonds double the notified amount to cash in on higher prices. Prices for the bonds were better than in previous auctions and were at a premium from the market, treasury heads said.
Bids offered for this OMO were worth ₹39,218 crore, versus the notified amount of ₹20,000 crore. Bonds maturing in the next four to six years saw maximum demand, Reserve Bank of India (
RBI
) data showed.
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The prices of bonds were at a premium from the market and are a factor of demand-supply dynamics. When you don't know how much the RBI is going to buy, then people are willing to sell at a discount also," said Rajeev Pawar, head of treasury at
Ujjivan Small Finance Bank
. "But now the RBI has announced a
OMO calendar
for May, people are selling at market prices or at slightly better than market prices," he said.
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RBI gets nearly double the bids in Rs 20,000-cr market purchase
Bids offered for this OMO were worth ₹39,218 crore, versus the notified amount of ₹20,000 crore. Bonds maturing in the next four to six years saw maximum demand, Reserve Bank of India (RBI) data showed.
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Indian bond yields rise on anticipation of new 10-year issuance, position unwinding
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The RBI announced on Monday that it will purchase ₹1.25 lakh crore
government bonds
via OMO purchases in four tranches spread across May. This announcement drove down yields of government bonds by five basis points, which closed at 6.35%, CCIL data showed.
"Now with so much of OMO supply, dealers have sold from their held to maturity (HTM) books and now want to sell at a premium from the market prices. This sale of bonds also creates demand for government bonds in the weekly auction," said Gopal Tripathi, head of treasury at
Jana Small Finance Bank
.
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This Friday, on May 2, the RBI will also auction the new 10-year paper for a quantum of ₹30,000 crore.
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