A weakening balance sheet may explain RBI’s rate actions
2 years, 7 months ago

A weakening balance sheet may explain RBI’s rate actions

Live Mint  

Mounting inflation concerns do not adequately explain the urgency behind the Reserve Bank of India’s decision to conduct an out of turn monetary policy meeting on 4 May. Rising interest rates, however, are increasing yields of US government bonds, which forms the bulk of foreign securities on RBI’s balance sheet as investments. The revaluation account, which is on the liability side of RBI’s balance sheet, shows the true impact of rising yields on the central bank’s operations. This account, which comprises currency and gold revaluation, investment revaluation and also its forward contracts valuation account, absorbs any changes in the value of both domestic and foreign assets held by RBI. Looking ahead, while the value of RBI’s foreign assets might stabilize somewhat in the near term, the extent of the correction in domestic securities cannot be ascertained yet.

Balance Indian Assets Domestic Interest Rates Value Foreign Rbi Sheet 4 May Its Balance Sheet Revaluation Account Rate Actions  balance  rbi  assets  revaluation  account  rate  actions  domestic  value  foreign  explain  rbis  weakening  sheet

History of this topic

RBI says India’s growth momentum to continue in FY24; stresses on structural reforms
1 year, 6 months ago

RBI says India’s growth momentum to continue in FY24; stresses on structural reforms

The Hindu  

The Reserve Bank on May 30 said that India’s growth momentum is likely to continue in 2023-24 even as it made a case for pushing structural reforms to deal with the geopolitical developments and also to achieve sustained growth in the medium-term. The Reserve Bank’s annual report flagged slowing global growth, protracted geopolitical tensions and a possible upsurge in financial …

RBI may buy $18 bn of bonds to boost liquidity, says B. Prasanna of ICICI
1 year, 6 months ago

RBI may buy $18 bn of bonds to boost liquidity, says B. Prasanna of ICICI

Live Mint  

The Reserve Bank of India may buy nearly $18 billion of government bonds to replenish banking liquidity that’s expected to tighten later in the year, according to a report by Bloomberg. The central bank may cut the cash reserve ratio by half a point in the second half of the fiscal and start buying bonds in the December quarter to …

RBI rate hike impact: What stock, bond market investors should know
2 years, 4 months ago

RBI rate hike impact: What stock, bond market investors should know

Live Mint  

Indian stock markets rose, the rupee strengthened and bond yields rose after the Reserve Bank of India hiked repo rate to pre-covid levels. The Reserve Bank of India raised the key policy repo rate by 50 basis points while Governor Shaktikanta Das remained optimistic about domestic growth. While the domestic inflationary pressures seem to be easing out gradually, the geopolitical …

India’s 10-yr bond yield hits 2-year high tracking US peers, crude
2 years, 11 months ago

India’s 10-yr bond yield hits 2-year high tracking US peers, crude

Live Mint  

India's benchmark 10-year bond yield hit a two-year high on Monday, tracking an uptick in U.S. yields and a continued rise in global crude oil prices which has raised expectations of rate increases by the Reserve Bank of India. India's benchmark 10-year bond yield rose 6 basis points from Friday's close to 6.64%, its highest since Jan. 22, 2020. The …

The curious case of India’s rising forex reserves and falling rupee
3 years ago

The curious case of India’s rising forex reserves and falling rupee

Live Mint  

For the uninitiated, the Reserve Bank of India’s balance sheet is a concoction of both domestic and international assets carefully modulated regularly. However, since RM on the asset side is now higher, RBI adjusts the liability side by increasing CIC, thereby creating new money. The subsequent systemic liquidity can flow into RBI’s balance sheet through the liquidity adjustment facility, balancing …

Surge in bond yields could drive growth off track: RBI
3 years, 9 months ago

Surge in bond yields could drive growth off track: RBI

Live Mint  

The Reserve Bank of India on Friday warned that rising bond yields could undermine the fragile global economic recovery, rendering most economies unable to tolerate high interest rates. In its latest currency and finance bulletin, RBI also pointed to the stubbornly high yields in the Indian bond market, cautioning that rising yields could prompt central banks to boost bond-buying. The …

RBI may consider issuing bonds to help soak up foreign money into stocks
3 years, 9 months ago

RBI may consider issuing bonds to help soak up foreign money into stocks

Live Mint  

The Reserve Bank of India may consider issuing its own bonds to help soak up a deluge of foreign money into stocks that threatens financial stability, according to a report published by its researchers. “Enhancement of sterilization capacity may be necessary to deal with possible surges in capital flows in the future.” The RBI report recommended further strengthening foreign-exchange reserves, …

Bond investors see RBI curbing yields amid India’s supply deluge
3 years, 10 months ago

Bond investors see RBI curbing yields amid India’s supply deluge

Live Mint  

India is set to sell another Rs260 billion of bonds on Friday amid rising expectations that the central bank will step into the market to keep yields from rising too far. Surprise demand at a special auction of government debt on Thursday spurred talk that state-run banks and primary dealers were scooping up bonds to sell to the Reserve Bank …

Bond turmoil on India’s cash drain shows market fragility
3 years, 11 months ago

Bond turmoil on India’s cash drain shows market fragility

Live Mint  

The Reserve Bank of India’s first steps to revive money-market rates proved how fragile sentiment remains, as a spike in bond yields spurred policy makers to announce more buying to quell the turbulence and protect the economy’s nascent recovery. The central bank’s first 14-day reverse-repurchase operation since March saw rates on short-dated sovereign bonds rise as much as 33 basis …

Treasury bill yields rise in India after RBI’s cash move
3 years, 11 months ago

Treasury bill yields rise in India after RBI’s cash move

Live Mint  

India’s Treasury bill yields rose at an auction after the central bank took the first step toward paring back on some of its pandemic relief measures. The 190 billion rupees sale was the first sovereign auction since the Reserve Bank of India said late on Friday it plans to drain cash via a reverse repo operation. “After today’s T-bill auction, …

RBI squeezes money markets to spur selloff in shorter bonds
3 years, 11 months ago

RBI squeezes money markets to spur selloff in shorter bonds

Live Mint  

India’s key money-market rates and yields on short-term debt rose after the central bank took its first small step toward unwinding emergency pandemic measures. The interbank call rate rose to as much as 3.50% as against Friday’s weighted average of 3.18% while the yield on a five-year bond was up 10 basis points after the Reserve Bank of India said …

RBI rides to rescue, unveils steps to cool rising bond yields
4 years, 3 months ago

RBI rides to rescue, unveils steps to cool rising bond yields

Deccan Chronicle  

Mumbai: In a bid to cool rising bond yields and maintain market stability in the financial system, the Reserve Bank of India on Monday announced a slew of measures including two more tranches of special open market bond operations or ‘Operation Twist’ and additional term repo operations of Rs one lakh crore at a floating rate basis. The central bank …

RBI Balance Sheet Expands by 30% in 2019-20
4 years, 3 months ago

RBI Balance Sheet Expands by 30% in 2019-20

News 18  

The size of the Reserve Bank’s balance sheet, which is reflective of activities carried out by it in pursuance of currency issue function as well as monetary policy and reserve management objectives, has increased by 30.02 per cent in the year ended June 30, 2020, says its annual report. The balance sheet increased by Rs 12,318.88 billion to Rs 53,347.93 …

RBI buys so many US dollars that it ends up supporting debt market
4 years, 5 months ago

RBI buys so many US dollars that it ends up supporting debt market

Live Mint  

The Reserve Bank of India has accumulated so many dollars recently that it’s having a knock-on impact on the nation’s sovereign debt market. “The central bank’s FX policy is achieving multiple objectives of augmenting reserves, creating liquidity that’s helping demand for bonds, and at the same time curbing rupee volatility,” said Naveen Singh, head of fixed-income trading at ICICI Securities …

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