India central bank announces raft of measures to boost banking liquidity
It will buy government bonds worth 600 billion rupees and conduct a 56-day variable rate repo auction worth 500 billion rupees
INDIA’S central bank on Monday (Jan 27) announced a host of measures to inject liquidity in the banking system, including bond purchases and dollar/rupee swaps.
The Reserve Bank of India will buy government bonds worth 600 billion rupees (S$9.33 billion) in three tranches and conduct a 56-day variable rate repo auction worth 500 billion rupees on Feb 7, it said in a release.
It will also conduct a USD/INR buy/sell swap auction of US$5 billion for a tenor of six months on Jan 31, the RBI said.
India’s banking system liquidity deficit widened a one-year peak in the previous fortnight.
The daily average banking system liquidity deficit jumped to 2.39 trillion rupees in the fortnight which ended on Jan 24, as per latest RBI data.
The RBI “will continue to monitor evolving liquidity and market conditions and take measures as appropriate to ensure orderly liquidity conditions,” it said.
The announcement is expected to have a “moderating influence” on bond yields, Vivek Kumar, an economist at QuantEco Research said. REUTERS
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