RBI conducts OMO purchases worth Rs 15,000 cr

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Mumbai | Published: April 8, 2016 6:14:58 AM

The Reserve Bank of India (RBI) has conducted open market operation (OMO) purchases of government securities worth Rs 15,000 crore on Thursday as a measure to improve the liquidity further.

The Reserve Bank of India (RBI) has conducted open market operation (OMO) purchases of government securities worth Rs 15,000 crore on Thursday as a measure to improve the liquidity further.

The RBI conducts OMO purchases to infuse liquidity into the system whenever there is a deficiency, while it conducts OMO sales to suck excess liquidity from the system. OMOs are also intended to keep the short-term interest rates close to the policy rate.

The repo rate currently stands at 6.50%, while the overnight call money rate on Thursday stood at 6.36%.

On Thursday’s auction, participants offered Rs 76,299 crore against a notified amount of Rs 15,000 crore by the central bank.

Six government securities—7.83% GS 2018, 8.12% GS 2020, 8.08% GS 2022, 7.72% GS 2025, 8.60% GS 2028 and 7.88% GS 2030 were bought by the central bank.

It is noteworthy that liquidity becomes tighter in the month of March owing to a variety of reasons like advance tax outflows and fiscal end demand because of which the central bank had been regularly conducting OMO purchases.

In Tuesday’s monetary policy review, the RBI had introduced a slew of measures to enhance liquidity in the system. The central bank said it would progressively lower the average ex ante liquidity deficit in the system to a position closer to neutrality.

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