India cenbank sells bonds for third straight week, amount rises
MUMBAI, Aug 2 (Reuters) -The Reserve Bank of India sold government securities from its portfolio for a third consecutive week ending July 26, with the sales outpacing the previous two weeks, data on Friday showed.
The RBI sold bonds worth an aggregate of 39.85 billion rupees (about $476 million), after a sale of 27.35 billion rupees in week ended July 19 and 34.05 billion rupees in week ended July 12, which was its first bond sale in more than 10 months.
The RBI typically sells or buys bonds to adjust banking system liquidity and rates in the market to align with monetary policy.
India's banking system liquidity surplus jumped in July, with a daily average of more than 1 trillion rupees, amid heavy government spending, and the central bank's intervention in foreign exchange market.
The bond sales signal the central bank is not comfortable with surplus liquidity at a time when inflation remains higher than its target of 4%.
Its next monetary policy decision is due on Thursday, where market participants will watch for commentary on the bond sales.
($1 = 83.7260 Indian rupees)
Reporting by Dharamraj Dhutia; Editing by Mrigank Dhaniwala
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