RBI seeking to curb yields buys bonds at a premium

Mumbai: The Reserve Bank of India (RBI) bought bonds at a premium to market prices in its open market operation (OMO) purchases Monday to help contain bond yields in volatile geopolitics.

Market participants offered ‘88,857 crore for a notified amount of ‘50,000 crore. The RBI bought bonds 4-9 basis points lower than the market levels, RBI & CCIL data showed.

For instance, the yield of the 6.01% GS2030 bond closed at 6.32%, while the cutoff yield on the OMO auction was 6.27%. Yield of 6.19% GS2034 bond closed at 6.72%, while the cut off yield in the OMO was at 6.63%. “The RBI bought papers at a fairly low yield, and price wise at a premium. I think these efforts are directed towards bringing down yields in an uncertain scenario,” said Anshul Chandak, head of treasury at RBL Bank.