India’s central bank said on Friday it would conduct open-market purchase auctions of government securities worth ₹1 lakh crore ($10.88 billion) in two tranches next week, as it steps up support for the currency and bond markets amid an escalating Middle East crisis.
The war between Iran and US-Israel has pushed up oil prices and sparked a rush towards safe-haven assets like the US dollar. The Indian rupee fell to a record low this week, prompting heavy intervention by the Reserve Bank of India, while bond yields rose nearly 3 basis points.
Dollar sales, estimated by traders at over $12 billion, will reduce rupee liquidity and push up interest rates. To counter that, the central bank has announced open market bond purchases.
The RBI will purchase seven government securities in two tranches of ₹50,000 crore each, it said, with the first auction on March 9 and the second on March 13.
The central bank has also been buying bonds from the secondary market, purchasing ₹9,900 crore in the week ended February 27.