India’s RBI to sterilize interventions with long-bond purchases

MUMBAI, August 21, 2013 (AFP) – India’s shares opened higher and bond yields eased Wednesday but its currency remained under pressure after the central bank announced moves to inject 80 billion rupees into the banking system. Banking stocks jumped on the new measures, pushing Indian shares 1.22 percent higher to 18,468.55 points, after falling nearly six percent in the past three days.

The rupee, the worst performing Asian currency this year, was slightly steadier, trading at 63.36 against the dollar on Wednesday morning, marginally lower than the previous day’s record closing low of 63.25.

The Reserve Bank of India (RBI) said late Tuesday it would inject 80 billion rupees ($1.26 billion) into the banking system by buying back long-term government bonds, a move expected to make more credit available.

The move appears to be a partial reversal of a string of measures the central bank has taken since mid-July to tighten liquidity in an attempt to stop the rupee plummeting against the dollar.

Those moves have failed to stop the currency’s slide, and instead have pushed up yields on 10-year benchmark bonds to a five-year high, as investors demanded higher returns, as well as raise borrowing costs as banks hike i

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