© Reuters.

(Bloomberg) — The Reserve Bank of India said it will offer more support for debt markets in a package of measures meant to control borrowing costs and reassure traders worried about a bond deluge.

Sovereign bonds rallied after the central bank said it would double the size of purchases at open market operations to 200 billion rupees ($2.7 billion). The RBI will also buy state debt, and help companies raise funds by doing targeted long-term repurchase operations worth a trillion rupees.

The latest measures come as stubbornly high inflation kept the central bank from cutting rates even as the economy suffers from Asia’s worst-virus outbreak. In a sign of stress, underwriters have had to pick up four sovereign debt auctions recently after investors demanded higher yields.

“This was a bond market policy today rather than the money policy,” said Vijay Sharma, executive vice president for fixed-income at PNB Gilts Ltd. Governor Shaktikanta Das “has done everything under his control, except cutting rates, to keep interest rates low through the bonds. The bullish sentiment will remain.”

The yield on the benchmark bond fell six basis points to 5.96%. The gained 0.2% to 73.0650 to a dollar.

“Market participants should be assured that in keeping with the monetary policy stance announced today, the RBI will maintain comfortable liquidity conditions and will conduct market operations in the form of outright and special open market operations,” Das said in his speech.

Benchmark yields have largely been steady this month with Prime Minister Narendra Modi’s administration sticking to its 12 trillion rupees borrowing aim for the fiscal year. The second-half borrowing starts Friday with a scheduled 280 billion rupee debt sale

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Source link