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RBI under the new leadership seems committed to ensure rate cut transmission for growth


The Reserve Bank of India (RBI) has announced measures to inject liquidity into the banking system, including two open market operation (OMO) purchase auctions worth ₹1 lakh crore and a USD/INR buy/sell swap auction of USD10 billion. RBI also announced Rs 50000 crore VRR auction to infuse temporary liquidity this week itself (on 7th March)
This is the second such liquidity measure announced by RBI in less than 1 months anticipating year end pressure.
System liquidity which had risen to a deficit of more than ₹3 lakh crore in January has started to come down with an average deficit of around ₹1.5 lakh crore in February and less than 30000 now.
Globally, Bond yields had risen sharply after Europe announced an unprecedented spending plan raising concern in fiscal deficit and supply side pressure. Germany's 10 year bund yields rose by more than 25bps, biggest rise in the last 3 decades, to 3.08%. US Bond yields also rose by 5 bps to 4.3% Australia, New Zealand and Japan Bond yields also rise around 10 bps.
So far Indian Bond yields have shown remarkable resilience and trade in a narrow range at around 6.75% despite global volatility. Once global volatility subsides, Indian Bond yields will move lower taking cues from dovish RBI.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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