For the second day running on Thursday, the Reserve Bank of India (RBI) conceded double-digit yields for selling short-term debt.

It sold short-term debt totalling Rs.5,195 crore for double-digit yields.

Sale of 28-day debt worth Rs.2,195 crore (against the planned sale of Rs.3,000 crore) was done at an yield of 11.17 per cent. The RBI, however, sold its entire planned 56-day debt worth Rs.3,000 crore, conceding an yield of 11.20 per cent.

The 91-day treasury bill auction on Wednesday for Rs.7,000 crore saw the central bank selling debt worth Rs.6,363.91 crore, allowing an yield of 11 per cent.

By conceding higher yields on short-term debt, the RBI has reiterated its determination to squeeze the liquidity in the system, and drain out the speculative fizz in the foreign exchange market.

Big challenge

Nevertheless, the RBI will face a big challenge on Friday when it sells government bonds worth Rs.15,000 crore.

The RBI has been aggressively defending the currency, and rolled out assorted measures in double-quick time. As a consequence, the rupee’s foray into 60s ended. The rupee rose to a five-week high of 58.76 a dollar intra-day on Thursday from its previous close of 59.13.

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