RBI has rejected all the bids for 364-day and 182-day treasury bills and only accepted 91-day bills at auction, as the monetary policy decision is due on 5th June. RBI has sold 91-day treasury bills at 5.56 percent. RBI rejects bids when the yields are high, and this shift may soften the interest rates.
This decision comes as the monetary policy committee started its meeting to decide on interest rates, and the policy decisions will be announced on 5th June. Yields on government bonds fell after the auction. The yields have increased in a year by 40 basis points, and the rupee is weakening.
Last week, this spread between the policy rate and 364-day treasury bills widened to 78 basis points, which is seen as the highest in the last four years. To stabilize the economic conditions, CS Setty, SBI Chairman, said there is a pause in interest rates.
|