The Reserve Bank of India will conduct an open market operation (OMO) purchase of government securities worth ₹500 billion on January 5. This is part of a broader liquidity infusion plan totaling ₹2 lakh crore across four OMO auctions, alongside a $10 billion USD/INR swap to ensure orderly market conditions.
The RBI announced it will purchase ₹50,000 crore worth of government bonds via OMO on January 5, aiming to ease liquidity and support stable financial conditions. This auction is one of four scheduled tranches totaling ₹2 lakh crore, complemented by a $10 billion USD/INR buy-sell swap over a three-year tenor.
Key highlights
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Auction details: The January 5 OMO purchase is set at ₹50,000 crore, within a four-auction schedule of equal size between December 29 and January 22.
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Liquidity objective: The measures target “orderly liquidity” amid evolving market conditions, supporting banking system funding and transmission.
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Swap support: A $10 billion USD/INR buy-sell swap with a three-year tenor will work alongside OMOs to stabilize liquidity and FX markets.
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Market impact: Bond yields may soften and term spreads compress near-term, with improved demand for government securities expected around auction windows.
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Monitoring: The RBI indicated it will continue assessing conditions and take further steps as necessary to maintain stability.
The coordinated OMO and swap actions underscore the RBI’s proactive stance to maintain liquidity and financial market stability.
Sources: Fortune India, Times of India, Moneyworks4me