May 12, 2021
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The central bank will purchase government securities of ₹35,000 crore under the G-SAP 1.0 on May 20
The Reserve Bank of India (RBI) on Wednesday said it will purchase seven government securities (G-Secs), maturing between 2024 and 2035, aggregating ₹35,000 crore under the second tranche of its G-Sec Acquisition Programme (G-SAP 1.0) on May 20.
The central bank’s purchase of G-Secs under the second tranche will be ₹10,000 crore more vis-a-vis the first tranche of purchase auction, which was conducted on April 15.
Under G-SAP 1.0, RBI has committed upfront to a specific amount (₹1-lakh crore in the first quarter of FY22) of open market purchases of G-Secs to enable a stable and orderly evolution of the yield curve amidst comfortable liquidity conditions.
Read more about G-SAP: Second tranche of bond buying worth Rs 35k cr on May 20, says RBI on Business Standard. The RBI had said on May 5 that it will buy Rs 35,000 crore bonds from the market, including the benchmark 10-year bonds
Lockdowns unlock bond market fears again, sending yields higher
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Apprehensions about the economic cost of lockdowns, especially the fear that governments may borrow more to compensate for lower tax revenues, sent yields higher.
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Mumbai: Local lockdowns have started hurting the Reserve Bank of India’s (RBI) weeks-long effort to keep government borrowing costs down. Apprehensions about the economic cost of lockdowns, especially the fear that governments may borrow more to compensate for lower tax revenues, sent yields higher.
However, Mint Road, the government of India’s (GoI) merchant banker, again tried to send a strong message to the local bond market on Friday by cancelling the benchmark paper auction for ₹14,000 crore. A devolvement on bond houses would have aided prevailing negative sentiment.
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Bond yields spiked this week. Again.What was it this time? Traders are citing a jump in wholesale inflation alongside the results of the first G-SAP auction, where the Reserve Bank of India bought limited quantities of the benchmark bond. The G-SAP, in case you missed it, is a newly minted bond purchase programme, under which the central bank plans to buy Rs 1 lakh crore in debt this quarter.Yield rise, yields fall. The reason weâre .
Bond yields spiked this week. Again.
What was it this time? Traders are citing a jump in wholesale inflation alongside the results of the first G-SAP auction, where the Reserve Bank of India bought limited quantities of the benchmark bond. The G-SAP, in case you missed it, is a newly minted bond purchase programme, under which the central bank plans to buy Rs 1 lakh crore in debt this quarter.