RBI conducts 3rd open market operation

The third special open market operation (OMO) has been conducted by the RBI. With the aim of correcting the yield spread the central bank has bought the long-term bonds and sold short-term tenure bonds.
The cut-off yield for the de-facto 10-year bond (9-year now) came at 6.54%, three basis points lower than the market close on the paper.

The central bank bought three papers maturing between 2024 and 2029. The total amount offered by the participants was Rs 64,505 crore for a purchase plan of Rs 10,000 crore.

In its third OMO, the central bank sold its full quota of Rs 10,000 crore in short-term bonds. The long-term bond yields have come down by about 20 basis points since the first OMO was announced last month. The main aim is to bring down long-term yields, through which transmission can be happened and the government can find it helpful in borrowing at a cheaper rate.