The Hindu Business Line : Rs 2,500-crore MSS auctions on Dec 8

AFTER cancelling scheduled auctions under the Market Stabilisation Scheme (MSS) for the past four consecutive weeks, the Reserve Bank of India has announced auctions worth Rs 2,500 crore of treasury bills to be held under the MSS on December 8.

Analysts ascribed comfortable liquidity conditions in the market as the reason for the latest auction announcement.

The central bank had earlier cancelled MSS auctions in response to the tightening liquidity conditions in the domestic debt market, beginning with the scheduled auction under the MSS for November 10.

Dealers said that there has been an easing in the tightness of liquidity conditions in the market, as indicated by the softening in the overnight call rates which eased to 3-3.50 per cent on Friday, from over 5.75 to 6 per cent levels nearly a fortnight ago.

Amounts parked by banks in reverse repo auctions also shot up to over Rs 18,000 crore on Friday, against a range on Rs 4,000 crore to Rs 7,000 crore during the week.

The continued spate of foreign fund inflows coupled with the expected external commercial borrowings worth $1-1.5 billion this year is likely to improve rupee liquidity further, dealers added.

T-bills: The RBI announced the auction of 91-day Government of India treasury bills for a notified amount of Rs 2,000 crore for December 8. Of this amount, Rs 500 crore will be auctioned under the regular auction calendar and Rs 1,500 crore under the MSS.

Auction of the 364-day Government of India treasury bills for a notified amount of Rs 2,000 crore has also been announced for December 8. In this case, Rs 1,000 crore will be auctioned under the regular auction calendar and Rs 1,000 crore under the MSS, said a press release.

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Rs 2,500-crore MSS auctions on Dec 8