RBI accepts 20 bps higher treasury bill cutoff yields than last auction
The Reserve Bank of India has increased the cut-off yields for treasury bills after canceling a prior auction. Yields of the 91-day, 182-day, and 364-day bills experienced a significant rise. While system liquidity has dropped compared to last month, it still remains in a positive state. Traders are bracing for additional hikes as they face liquidity constraints and high oil prices, with the…
The Reserve Bank of India has raised treasury bill cutoff yields by 20 basis points, compared to the last successful auction, following the cancellation of the previous auction last week. Treasury bills, which are short-term bonds, soared to their highest level in nearly two years due to a liquidity deficit and soaring oil prices, according to traders.
The 91-day cutoff yield reached 5.93%, the 182-day yield hit 6.54%, and the 364-day yield stood at 6.69%, all 20 basis points higher than the previous auction. These yields were about 20 basis points higher than the yields in the previous successful auction. The central bank had previously canceled the auction on October 21 due to the high yields, which were approximately 15 basis points higher than the previous week.
Traders are demanding a greater liquidity premium as a result of liquidity tightening and high oil prices, which is causing higher yields in the treasury bill market. The system liquidity has been at a surplus of approximately ₹35,000 crores, up from a large surplus last month, with the daily average surplus in October reaching ₹2.6 lakh crore, compared to ₹7.8 lakh crore in September.
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