Tag: Open Market Operations

RBI to pump in Rs 12,500 crore liquidity on June 20

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India said Thursday said it will infuse Rs 12,500 crore into the financial system through bond purchases on June 20. The decision has taken based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, the central bank said in a statement.

The purchase of government securities under the Open Market Operation (OMO) for Rs 125 billion (Rs 12,500 crore) will be conducted on June 20, 2019.

The government securities to be purchased in the auction would be communicated in due course, the RBI added.

Earlier in the day, the RBI injected Rs 15,000 crore into the system through bond purchases.

The RBI uses open market operations (OMO) for injecting liquidity into the system through the purchase of government bonds (G-sec). The purchase of government securities under the Open Market Operation (OMO) for Rs 125 billion (Rs 12,500 crore) will be conducted on June 20, 2019.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India 10-year bond yield at over one-year low; sentiment bullish

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India’s benchmark 10-year bond yield dropped to its lowest level in more than a year on Monday buoyed by a fall in global crude oil prices and the announcement of another round of open market operations by the central bank.

“There is also possibly some foreign portfolio investor buying happening in the market,” a senior trader at a private bank said.

India’s benchmark 10-year bond yield at 7.16 percent, its lowest level since April 9, 2018. It had ended at 7.23 percent on Friday.

Traders expect sentiment for bonds to remain positive ahead of the upcoming monetary policy committee meeting outcome on June 6. The Reserve Bank of India (RBI) last week announced an open market operation to buy up to Rs 15,000 crore ($2.16 billion) worth of bonds on June 13.

“The auction amount overall is lesser than what they did in May but they have not said they won’t do more. So we need to wait and watch. They will conduct another round possibly if they see the need for it,” a senior dealer with a state-run bank said.

The RBI had conducted two OMOs for a total of Rs 25,000 crore in May.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI to infuse Rs 15,000 crore next month through G-sec purchases

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India on Friday said it will inject Rs 15,000 crore into the financial system next month through the purchase of government bonds via the auction route.

The government securities will be bought under Open Market Operations (OMO).

The decision has been taken in view of the evolving liquidity situation, the central bank said in a statement.

“Based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, RBI has decided to conduct the purchase of Government securities under OMO for Rs 150 billion on June 13, 2019,” the RBI said.

Details about the purchase of the government securities would be communicated in due course, it added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI to inject durable liquidity worth Rs 15,000 crore

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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To ease liquidity concerns, the Reserve Bank of India (RBI) on Friday said that it will inject Rs 15,000 crore through open market operations (OMOs) on June 13.

Open market operations (OMOs) are conducted by the RBI by sale or purchase of government securities (g-secs) to regulate money supply in the market.

The sale or buying of g-secs infuses or reduces liquidity. OMOs like repo rate, cash reserve ratio and statutory liquidity ratio are monetary policy tools to balance inflation.

“Based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward, the RBI has decided to conduct purchase of government securities under OMO for Rs 150 billion on June 13, 2019,” the apex bank said in a statement.

The financial sector has been facing liquidity crunch ever since the Infrastructure Leasing and Financial Services Ltd (IL&FS) defaulted in its payment obligations, triggering reluctance among lenders to lend to the Non Banking Financial Company (NBFC) sector.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI to inject Rs 12,500-crore liquidity via OMOs on Thursday

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) on Monday said it would inject Rs 12,500 crore into the system through purchase of government securities on Thursday to increase liquidity.

The purchase will be made through open market operations (OMOs).

“Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of…government securities under OMOs for an aggregate amount of Rs 125 billion on February 21, 2019,” the RBI said in a release.

The eligible participants should submit their offers in electronic format on the RBI core banking solution (E-Kuber) system on February 21.

The result of the auction will be announced on the same day and payment to successful participants will be made on the following day, RBI said.

OMOs are financial tools to either inject or suck out liquidity from the system. When the liquidity is tight, money is pumped into the market by purchase of government securities.

While in the case of surplus, the excess money is sucked out by selling of government bonds.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI to inject Rs 37,500 crore through OMO in February

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India on Tuesday said it will inject Rs 37,500 crore into the system through purchase of government securities in February to increase liquidity.

The RBI said it has been monitoring the evolving liquidity conditions and durable liquidity requirements of the system.

“Accordingly, it has been decided to conduct purchase of government securities under Open Market Operations (OMOs) for an aggregate amount of Rs 375 billion in the month of February 2019 through three auctions of Rs 125 billion each during the 2nd, 3rd and 4th week,” the RBI said in a release.

There will be no auction during the first week due to the scheduled MPC meeting, it added.

The apex bank said it will inform about the auction dates in the due course.

The OMO for the month is indicative and the RBI retains the flexibility to change it, depending on the evolving liquidity and market conditions, it said further.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI to inject Rs 50,000 crore liquidity into system via open market operations

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Reserve Bank of India (RBI) on Tuesday said it would inject Rs 50,000 crore into the system in January 2019 through a purchase of government securities.

“Further, based on an assessment of the durable liquidity needs going forward, RBI has decided to conduct purchase of government securities under Open Market Operations (OMOs) for an aggregate amount of Rs 500 billion in the month of January 2019. The operations will be conducted through five auctions of Rs 100 billion each,” the central bank said in a release.

The RBI will detail the auction dates for the OMOs in due course.

However, it added that this OMO amount is indicative, with the RBI retaining the flexibility to change it, depending on the evolving liquidity and market conditions.

“On a review of the evolving liquidity conditions, it has been decided to scale up the amounts to be purchased in the remaining two OMO auctions scheduled in December 2018 to Rs 150 billion each. Consequently, the total injection of durable liquidity for the month of December 2018 would amount to Rs 500 billion,” the RBI said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI monetary policy: Bond markets salute central bank’s liquidity gift

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bond markets heaved a sigh of relief post announcement of the Reserve Bank of India monetary policy committee (MPC) decision. While there was near consensus on the status quo on rates, what has really excited the markets is the lower revision in inflation targets, and the high chances of continuity of open market operations (read OMO purchases) through March 2019.

Already, we have seen OMO purchases announcements of Rs 1.66 trillion so far and that has been one of the strong catalysts to pull down bond yields. Needless to say, the main hero of the bond story has been crude oil – which is down 27 percent since the last MPC meeting on October 5. The 10-year government bond yield, which was north of 8.05 percent on October 5 closed post policy on December 5 at 7.44 percent ( a drop of over 60 basis points (bps) in 60 days).

One basis point is a hundredth of a percentage point.

Sentiments seem to have moved from extreme end of pessimism to extreme end of optimism indeed. There is a song in the famous Bollywood movie Hera Pheri which goes thus. “Dene wala jab bhi deta, deta chappar phadke…” which means when God decides to give you something, he overwhelms you. I am tempted to hum this song seeing the current move in bond markets.

Those who called it a doomsday for the bond markets are now wondering if this could be the right time to enter. Such has been the turn of pendulum lately. Every asset class has its own shares of ups and downs. Key for every investor is to ascertain one’s asset allocation and most importantly what the intended investment horizon is.

Once that is done, the portfolio rebalancing has to be done only to re-shuffle the deviations from the intended allocations and/or if the intended goal post has been reached. Unfortunately, what may seem like common sense is seldom put into practice. It sounds very fancy to quote legendary investors such as Warren Buffet, Benjamin Graham etc. But to walk the path which most successful investors have, one needs to conquer two key emotions viz. Greed and Fear. As Warren Buffet puts it “ Be fearful when others are greedy and greedy when others are fearful.”

Markets are now pricing in an extended pause in interest rates, which means we may end FY 2019 at 6.50 percent on repo rates.  At this level of overnight rate, there is quite a bit of value embedded, especially in corporate bonds across maturities. For those who do not have the time and knowledge to participate into direct bonds, it may be worthwhile to consider gaining exposure to debt via mutual funds. But as I stated, it is most important to stay the course, irrespective of the nature of the journey. On that note, happy investing.

Lakshmi Iyer is CIO – debt and head – products at Kotak Asset Management.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

RBI to hold fire in December 5 policy, says CNBC-TV18 poll

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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In the two months since Reserve Bank of India’s (RBI) last Monetary Policy Committee (MPC) meeting in early October, a lot has changed.

Amid a sharp rise in international crude oil prices, a strengthening US dollar putting pressure on emerging market currencies, rise in bond yields across major economies and escalating trade tensions between the world’s largest economies, the ‘inflation targeting’ central bank took the market by surprise by leaving the policy rate unchanged, but altered the stance of the policy to ‘calibrated tightening’ form neutral, in a 5-1 vote.

Two months later, crude prices have slipped below $61/barrel, the India rupee is back at 70 against the US dollar, and retail inflation has eased to a 13-month low of 3.31 percent for the month of October.

As for growth, after touching a high of 8.2 percent for the first quarter of FY19, gross domestic product (GDP) growth has slowed down to 7.1 percent in the second quarter, and with the base effect benefit wearing off, the second half is unlikely to see a very strong growth.

In light of this, all the respondents polled by CNBC-TV18 were unanimous in their expectation of RBI leaving the repo rate unchanged at 6.50 percent in the fifth bi-monthly monetary policy, which is due to be announced on December 5.

The mix of economists, brokerages, treasury heads and bankers polled by CNBC-TV18 expect the MPC to remain in a wait and watch mode, while maintaining its ‘calibrated tightening’ stance. The respondents do not expect any change in the repo rate, at which RBI lends money to banks, until the end of the financial year.

Data released last Friday showed GDP growth slowing down in the second quarter, and the second half is expected to be weaker. Half the respondents believe the GDP growth estimate of 7.4 percent for FY19 may be lowered, whereas the other half believes it will be left unchanged for now.

The MPC had lowered the retail inflation forecast to 3.9-4.5 percent for the second half of FY19 and at 4.8 percent for the first quarter of FY20, citing risks from rising crude oil prices, possible fiscal slippages in an election year, global market volatility.

Eighty percent of the respondents polled by CNBC-TV18 expect the forecast for the second half of this year to be lowered, especially as inflation print is expected soft on the back of benign food prices.

Another subject that has dominated debates among economists is that of liquidity. RBI has bought bonds worth Rs 10,600 crore through Open Market Operations (OMO) since September, and is expected to further infuse Rs 40,000 crore more before the end of this fiscal year. Despite these moves, the system liquidity remains in deficit.

However, given that RBI is managing this through repo and OMOs, the respondents do not expect any significant measures to be announced in this policy. Only ten percent of those polled expect the RBI to cut the cash reserve ratio (CRR) for banks to meet liquidity demands, but majority expects that tool to not be used.

The tone of the monetary policy may be more dovish, according to 90 percent of those polled by CNBC-TV18, given that retail inflation has under-shot RBI’s target of 4 percent for three straight months now.

The three-day meeting of the MPC started on December 3, and the resolution of the committee will be made public at 2.30 pm on Wednesday, December 5.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow