Data published on Friday indicated that the RBI sold bonds worth 11.95 billion rupees (about USD 161.85 million) in the week ending September 20, bringing the total sale for the 11 weeks to 240.6 billion rupees.

The data revealed that the Reserve Bank of India (RBI) has continued to sell government bonds from its portfolio for eleven consecutive weeks, marking its longest streak since January 2022.

According to Gaura Sen Gupta, chief economist at IDFC First Bank, small bond sales could help address bond demand and supply dynamics. She highlighted that demand has been supported by bond index inclusion flows and long-term investor interest.

Gupta proposed that the small quantity indicates the RBI’s intention to make sales without causing disruption. She also noted that sales of this kind could persist as the banking system’s liquidity conditions are anticipated to remain comfortable due to the increase in core liquidity.

To align them with its monetary policy, the central bank typically adjusts banking system liquidity and rates by selling or buying bonds. However, these operations also impact yields.

The banking system liquidity in India has maintained an average surplus of over one trillion rupees during the July-September quarter.

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