RBI boost for bond street

Benchmark yield softens 9 bps to 6.54%

- CHRISTINA TITUS

THE BOND MARKET rallied on Wednesday, with the yield on benchmark 10-year government securities (G-Sec) falling 9 basis points (bps) to 6.54% on the back of unexpectedly large liquidity measures by the Reserve Bank of India (RBI), which provided the much-needed boost.

On Tuesday, post-market hours, the central bank said it would purchase government securities worth about ₹2 lakh crore through OMOs, spread across four tranches of %50,000 crore each to be conducted on December 29, January 5, January 12, and January 22.The amount was almost double the market expectation, which led the rally in the market on Wednesday.

In addition, the RBI will undertake a three-year USD-INR buy-sell swap of $10 billion on January 13. The latest data show that net liquidity in the banking system was in deficit of ₹66,653 crore as of Tuesday, underscoring the timeliness of the RBI’s intervention.