Government Security (G-Sec) prices rose on Thursday in the backdrop of the Reserve Bank of India’s announcement that it will conduct special liquidity operations for the end of the Financial Year.
Price of the 10-year benchmark G-Sec (carrying a coupon rate of 5.85 per cent) was up 15 paise to close at ₹97.96 over the previous close (₹97.81), with its yield declining about two basis points to 6.1311 per cent (6.1521 per cent).
Price of the 5-year G-Sec (carrying a coupon rate of 5.15 per cent) rose about 17 paise to close at ₹98.015 over the previous close (₹97.85), with its yield declining about four basis points to 5.6425 per cent (5.6838 per cent).
As part of the special liquidity operations for the end of the Financial Year, the RBI said it will conduct fine-tuning variable rate repo auctions on March 26 and March 31for ₹25,000 crore each.
These auctions are to meet any additional/ unforeseen demand for liquidity and to provide flexibility to the banking system in year-end liquidity management.
Furthermore, the central bank, as a one-time measure, has decided not to conduct any variable rate reverse repo auction for the fortnight beginning March 26in order to ensure the availability of ample liquidity to manage year-end requirements.
The tenor of the March 26 auction will be for 11 days and that of the March 31 auction will be five days.
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