This was part of a Rs 26,000-crore primary auction. In Friday’s auction, the central bank also introduced a new 3-year bond at 4.26 per cent.
The RBI routinely cancels the 10-year auction, or curtails it, as it targets the 10-year segment as the rate signal.
Therefore, whenever the 10-year rates inch up, in this case above 6 per cent, the RBI refuses to sell it, say experts.
On May 20, the RBI will buy Rs 35,000 crore of bonds from the market as part of its government securities acquisition programme (G-SAP) where it will also buy the 10-year bonds. The cancelling of auctions, along with secondary market purchase of the 10-year bonds, keep the yields soft, which the RBI hopes will work as a signal for the market as well as banks.
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