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The first such open market operations (OMO) for the fiscal year 2019-20, amounting to Rs 12,500 crore, will happen on May 2 The Reserve Bank of India (RBI) plans to buy Rs 25,000 crore worth of bonds in two installments from the secondary market in May, it has notified.  The first such open market operations (OMO) for the fiscal year 2019-20, amounting to Rs 12,500 crore, will happen on May 2. The date for the second auction has not been given. This would be on top of the dollar swaps that the central bank is undertaking. The system liquidity was short of Rs 1.4 trillion as on Monday. This is despite the central bank buying bonds worth Rs 3 trillion in the last fiscal year and infusing another about Rs 70,000 crore through two dollar swaps.  The OMO plan is in continuation with the central bank’s practice in the last financial year. The RBI had spelt out how much of bonds it would purchase from the market through monthly calendars. In the OMO, the central bank would be b...

The three-year forward premium was 775 paise in the morning before the auction The Reserve Bank of India’s (RBI's) second three-year dollar-rupee swap auction was a massive success like the first one, even as it took just five large bids to cover the entire dollor 5 billion on offer.  Market participants bid more than three times the offer, but the five successful bids were closer to the market rates and managed to shoot up the forward premium in the secondary market.  “The aggressive bids most likely came in from a large corporate looking to hedge long-term dollar liabilities, such as external commercial borrowings,” said Abhishek Goenka, managing director of IFA Global. RBI's second 3-year dollar-rupee swap auction too a grand success Since the other participants could not offload their dollar holdings, the central bank offered to buy up to Rs 25,000 crore of bonds from the secondary market in May to help with liquidity. The banking system was running a liquidity defic...