"Based on the current assessment of prevailing and evolving liquidity conditions, the Reserve Bank has decided to conduct purchase of government securities under open market operations for an aggregate amount of Rs 100 billion on September 8, 2016 through multi-security auction,"said RBI. The Reserve Bank will conduct open market operations (OMO) to purchase government bonds to infuse liquidity of Rs 10,000 crore on Thursday. As part of the OMOs, RBI will purchase government securities maturing in 2017 (bearing interest rate of 7.46%), 2022 (8.15%), 2025 (8.2%), 2017 (8.6%) and 2030 (7.88%). If there is excess liquidity, RBI resorts to sale of securities and sucks out the rupee liquidity. Similarly, when the liquidity conditions are tight, RBI buys securities from the market, thereby releasing money into the market.

Source: dna September 06, 2016 18:33 UTC