The Reserve Bank of India said it will offer more support for debt markets in a package of measures meant to control borrowing costs and reassure traders worried about a bond deluge.
Sovereign bonds rallied after the central bank said it would double the size of purchases at open market operations to 200 billion rupees ($2.7 billion). The RBI will also buy state debt, and help companies raise funds by doing targeted long-term repurchase operations worth a trillion rupees.
The latest measures come as stubbornly high inflation kept the central bank from cutting rates even as the economy suffers from Asia’s worst-virus outbreak. In a sign of stress, underwriters have had to pick up four sovereign debt auctions recently after investors demanded higher yields.
“This was a bond market policy today rather than the money policy,” said Vijay Sharma, executive vice president for fixed-income