Smart RBI created scope within the limited space to keep pushing growth
SECTIONS
Last Updated: Apr 08, 2021, 06:09 PM IST
Share
Synopsis
Under the newly-announced program, RBI will commit upfront to a specific amount of open market purchases of government securities.
Economist, Geojit Financial Services
She holds a Masters in Economics and is currently pursuing her doctoral studies. Before joining Geojit, she was working as Senior Research Associate at the Kochi, Kerala-based think-tank Centre for Public Policy Research. Ms Mathew writes regularly on the developments in the areas of monetary policy, fiscal policy, international trade and Union/State budgets.
Related
The first Monetary Policy Committee (MPC) meeting of FY22 took place when the country has been witnessing a fresh surge in the Covid-19 cases. The second wave of the pandemic has created uncertainty for India’s near-term growth prospects. Ever since the advent of the pandemic, RBI has resorted to various liqui
Updated Apr 08, 2021 | 10:55 IST
Gold price today: On Wednesday gold, silver prices rallied around 1% each as the Indian rupee saw its worst fall in 20 months. Gold price today
New Delhi: Gold, silver price witnessed some pullback on Thursday after Wednesday s rally on the back of rupee depreciation. On the Multi Commodity Exchange (MCX), Gold June futures were down 0.02% at Rs 46,356 as of 10:02 am, as compared to its previous closing value of Rs 46,362. Silver May futures on MCX traded 0.14% lower at Rs 66,540 per kg as compared to Wednesday s closing price of Rs 66,634.
On Wednesday gold, silver prices rallied around 1% each as the Indian rupee saw its worst fall in 20 months. The rupee crashed 105 paise against the USD to close at 74.56 after the Reserve Bank of India announced measures to reign in a rise in government bond yields.
April 08, 2021
×
Government Security (G-Sec) prices rose for the second day on the trot on Thursday as the Reserve Bank of India (RBI) announced guaranteed liquidity support to market participants via a G-Sec acquisition programme (G-SAP).
Price of the benchmark 10-year G-Sec (carrying 5.85 per cent coupon rate) closed at ₹98.68, up 36 paise over the previous close, with its yield thawing about 5 basis points to 6.0313 per cent.
Yield declines 9 bps
In the last two days, the benchmark G-Sec gained about 64 paise in price terms, with its yield declining about 9 basis points. Bond prices and yields are inversely related, moving in opposite directions.
Vinay Pai, Head, Fixed Income, Equirus Capital, said: “By announcing upfront an amount of ₹1-lakh crore under G-SAP, the RBI has comforted traders.
RBI puts in place G-SAP for orderly functioning of G-Sec market freepressjournal.in - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from freepressjournal.in Daily Mail and Mail on Sunday newspapers.
RBI s G-SAP 1.0 masterstroke: Where should debt mutual fund investors invest?
The RBI will purchase government securities worth Rs 1 lakh crore under GSAP 1.0 in Q1FY22. It had purchased bonds worth around Rs 3.13 lakh crore from the secondary market in FY21.
The RBI also announced its intention to expand its Variable Rate Reverse Repo auction program in FY22.
In its first monetary policy review for financial year 2021-22, RBI kept the key lending rates unchanged amid a surge in COVID-19 cases across the country. The central bank s decision was on expected lines. It is a positive policy for bond markets, say debt mutual fund managers. They believe the surprise introduction of G-SAP 1.0, a secondary market G-Sec acquisition programme, is a great move to contain the volatile long-term bond yields.