RBI buys Rs 10k cr of long-term securities, sells Rs 2,950 cr of short-term govt bonds in 4th special OMO

In the fourth special open market operation (OMO) auctions, the Reserve Bank of India on Thursday bought Rs 10,000 crore worth of long-term securities and sold Rs 2,950 crore worth of short-term government bonds.

Last week, the RBI had said it will simultaneously purchase and sell government securities under open market operations (OMO) of Rs 10,000 crore each.

In the OMO purchase auction, the RBI received bids worth Rs 26,887 crore for two types of securities -- 7.32 per cent-2024 and 6.45 per cent-2029 -- but accepted only Rs 10,000 crore of bids.

For 7.32 per cent-2024, it got 157 bids and accepted 40 bids. The RBI got 147 bids for 6.45 per cent-2029 bonds but accepted 105 bids.

The cut-off yield for 7.32 per cent-2024 was 6.408 per cent, while for 6.45 per cent-2029, it was 6.5780 per cent.

The RBI offered to sell two government securities -- 7.80 per cent-2021 and 7.94 per cent-2021 -- through the OMO.

It received Rs 35,375 crore of bids but accepted Rs 2,950 crore of bids.

In terms of number of bids, the central bank received 85 bids for 7.80 per cent-2021 and 70 bids for 7.94 per cent-2021 but accepted 3 and 7 bids, respectively.

The cut-off yield for 7.80 per cent-2021 was 5.6714 per cent and for 7.94 per cent-2021 was 5.7192 per cent.

These special OMO auctions are similar to the US Federal Reserves' Operation Twist aimed at faster transmission of policy rates, an analyst said.

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