RBI net buys record $6.2 billion debt to shield bonds from war shockwaves

The Reserve Bank of India stepped up its government bond purchases from the secondary market to a record level in the week ended March 6, data showed on Friday, as the central bank tried to stabilize the market roiled by the Middle East war.

The ‌Reserve Bank ⁠of ⁠India net bought bonds worth 572.10 billion rupees ($6.20 billion) over the four ​trading sessions in the week, making it the third consecutive week of purchases. ​The settlement of the transactions takes place one day after the trade.

* Infusing liquidity is the main purpose of bond purchases, but ​they also impact yields

* RBI had bought ⁠bonds worth ‌99 billion rupees in the week ended February ​27 and ​28.15 billion rupees in the week ended February ⁠20

* RBI had bought bonds worth 173.95 billion ​rupees in January, 41.55 billion rupees in December ​and 272.80 billion rupees in November, taking aggregate secondary market purchase to 1.19 trillion rupees for the financial year

* “From a demand vs supply narrative, markets have remained well supported as RBI has continued to undertake on-screen as well as scheduled OMOs,” Basant ‌Bafna, head of fixed income at Mirae Asset Investment Managers (India)* “With supply for the financial year having been ​completed, support from ​RBI has helped ⁠anchor yields.”* RBI has bought bonds worth a record 8.53 trillion rupees so far this year

* Total liquidity infusion, including other measures this fiscal is at 13.33 trillion rupees

* Traders say, the central bank was an active buyer in the secondary market in the current week, and also anticipate purchases to continue till the end of the financial year

($1 = 92.3320 Indian rupees)