While the Reserve Bank is expected to reiterate its commitment towards ample liquidity in the system, traders are expecting more aggressive bond purchases
He also suggested that the Centre spend up to 1% of India s GDP for direct cash transfer to the poor to strengthen consumption at the bottom of the pyramid
Minutes of the Federal Open Markets Commission monetary policy review signalled the US central bank could reconsider its $120 billion bond purchase programme
Released liquidity may help banks to subscribe to G-Secs
May 20, 2021
Market participants offered to sell seven G-Secs aggregating ₹1,21,696 crore
Liquidity released on account of purchase of Government Securities (G-Secs/GS) aggregating ₹35,000 crore by the Reserve Bank of India (RBI) on Thursday may encourage banks to subscribe to G-Secs aggregating ₹32,000 crore at Friday’s scheduled auction.
Market participants offered to sell seven G-Secs aggregating ₹1,21,696 crore against the notified amount of ₹35,000 crore RBI wanted to buy under the second tranche of its G-sec Acquisition Programme (G-SAP 1.0).
RBI accepted offers for six G-Secs aggregating the notified amount. It rejected all the offers for 7.95 per cent GS 2032.
RBI stepped up G-Sec buys in past 2 weeks
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Synopsis
The central bank net purchased Rs 34,175 crore of sovereign papers between April 22 and May 4 from the secondary market to ensure lower borrowing costs amid concerns that the second Covid wave would derail the nascent economic recovery. Market experts believe that this could well be a record for a two-week period.
Reuters
The G-Secs Acquisition Programme (GSAP) and open-market operations (OMO) are the central bank’s rate-influencing tools.
The Reserve Bank of India (RBI) has stepped up sovereign bond purchases in the past two weeks to help lower borrowing costs, signalling its commitment to go beyond announced plans as growth revival temporarily trumps inflation management at Mint Road.