The Reserve Bank of India (RBI) on Monday said it will purchase four government securities (G-Secs) aggregating ₹20,000 crore under open market operations (OMOs) on February 10, 2021.
This comes in the backdrop of yields moving up to touch an intra-day high of 6.1634 per cent (on Tuesday) last week on concerns about higher government borrowing.
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Following the announcement of the OMO purchase, yield on the benchmark 10 year G-Sec, carrying a coupon rate of 5.77 per cent, softened about 3-4 basis points in today’s trading so far against the previous closing yield of 6.1283 per cent.
Last Friday, when the monetary policy review was conducted, the G-Sec market didn’t seem impressed with the liquidity and regulatory measures that were announced.
Yield on the 10-year benchmark G-Sec edged up about 3 basis points on February 5, 2021, to close at 6.1283 per cent and its price declined about 23 paise to ₹97.45.
The OMO announcement for purchase of G-Secs — 6.18 per cent G-Sec 2024; 7.17 per cent G-Sec 2028; 5.77 per cent G-Sec 2030; and 6.19 per cent G-Sec 2034 — is expected to keep the yields in check.
The government will be borrowing ₹80,000 crore more in the February-March 2021 period. The gross borrowing programme next year is of the order of ₹12-lakh crore.