RBI’s Bond Purchases Strengthen Liquidity; Benchmark Yield Steady

The Reserve Bank of India (RBI) has announced significant bond purchases under its open market operations, totaling ₹626.55 billion as of January 23. This move underscores the central bank’s commitment to managing liquidity and ensuring stability in the financial system.

Additionally, the RBI confirmed that the federal government had no outstanding loans with it as of the same date, highlighting fiscal discipline and reduced reliance on central bank financing.

Key Highlights:

• Bond Purchases: ₹626.55 billion under open market operations.
• Government Loans: No outstanding federal government loans with RBI as of Jan 23.
• Benchmark Yield: India’s 10-year government bond yield closed at 6.6963%, slightly lower than the previous close of 6.6984%.
• Market Context: Stable yields reflect balanced liquidity conditions and investor confidence.
• Outlook: Analysts expect RBI to continue using open market operations to manage liquidity and support growth.

The developments reinforce RBI’s proactive role in maintaining financial stability while supporting India’s broader economic objectives.

Sources: Reserve Bank of India (RBI), Reuters, Business Standard.