Mumbai:
On a day Moody’s upgraded India’s sovereign rating, the RBI said it has withdrawn the sale of Rs 10,000 crore worth of G-secs under Open Market Operations.
The central bank in a statement said the OMO scheduled for November 23 has been withdrawn in view of the recent market developments.
“In view of the recent market developments and based on a fresh review of the current and evolving liquidity conditions, it has been decided to withdraw the Open Market Sale Operations scheduled for November 23, 2017 (Thursday),” RBI said without elaborating.
US-based Moody’s today upped India’s rating to Baa2 from Baa3, changing outlook to ‘stable’ from ‘positive’, seen as a boost to the Modi government’s reform agenda.
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Earlier in the day, SBI’s research report ‘Ecowrap’ had said that with the pending OMO sales on November 23, cumulative sales for the year would touch Rs 1 lakh crore.
“We think that the central bank should stop further OMO sales for now,” it said.
As per the report, the RBI has been relentlessly sucking out liquidity since July 2017 through OMO.
Average monthly core liquidity (Repo operations after adjusting for government surplus cash balances) has declined to Rs 1.11 lakh crore so far in November from Rs 4.18 lakh crore in April, the report said, adding that this in turn has led to surge in bond yields which moved to over 7 per cent.
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