RBI scaling up liquidity injections

Rs500 bn earmarked for January through five auctions

MUMBAI: The Reserve Bank of India (RBI) has decided to scale up the amounts to be purchased in the remaining two open market operations (OMO) auctions scheduled in December 2018 to Rs150 billion each following a review of the evolving liquidity conditions.

This will take the total injection of durable liquidity for the month of December 2018 to Rs500 billion.

The RBI statement also said that based on an assessment of the durable liquidity needs going forward, it would conduct purchase of Government Securities under Open Market Operations (OMOs) for an aggregate amount of Rs500 billion in the month of January 2019. The operations will be conducted through five auctions of Rs100 billion each.

The liquidity conditions will continue to be monitored and depending on the assessment, RBI will consider similar quantum of OMO purchases until end of March 2019. The exact calibration of the quantum of OMO would depend on sustained changes in the behaviour of currency in circulation, the magnitude of sterilisation operations for RBI’s forex operations and other relevant factors.

The auction dates and the Government securities to be purchased in the respective auctions would be communicated in due course. The OMO amount stated above is indicative and RBI retains the flexibility to change it, depending  on the evolving liquidity and market conditions.


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