RBI Conducts Bond Switch Auction As Rupee Hits Record Low

The Reserve Bank of India carried out a significant debt management exercise through a bond switch auction, aimed at easing near-term repayment pressures and extending the maturity profile of government securities. The auction involved multiple switches across 2027–2029 bonds into longer-dated securities maturing in 2033–2035.  

Key highlights from the announcement include  

• RBI switched the 8.60% 2028 bond into the 6.57% 2033 debt at a 6.5613% cut-off yield.  
• The 7.17% 2028 bond was exchanged for the 7.57% 2033 debt at a 6.5534% cut-off yield.  
• The 7.59% 2029 bond was switched into the 6.19% 2034 debt at a 6.5806% cut-off yield.  
• The 7.38% 2027 bond was converted into the 6.67% 2035 debt at a 6.5995% cut-off yield.  
• The 8.24% 2027 bond was exchanged for the 7.50% 2034 debt at a 6.5759% cut-off yield.  
• Overall, the government issued Rs 91.40 billion of new securities and bought back Rs 88.08 billion of old bonds.  
• On the currency front, the Indian rupee ended at a record closing low of 90.7250 per US dollar, down 0.3% on the day.  

This auction highlights RBI’s strategy to manage debt sustainability while balancing market yields. The rupee’s weakness underscores external pressures, including strong dollar demand and global uncertainties.  

Sources: Reuters, Economic Times, Business Standard, Mint