India’s central bank has said that it will inject 80bn rupees ($1.3bn; £806m) into the country’s banking system by buying long-term government bonds.
It comes just days after the central bank tightened the money supply in an attempt to stem the rupee’s decline.
The move is expected to make more credit available and also bring down borrowing costs for the government.
On Tuesday, the bond yield or the cost of borrowing on India’s 10-year bonds touched 9.48%, the highest since 2001.
The Reserve Bank of India (RBI) said that it was “important to ensure that the liquidity tightening does not harden longer term yields sharply and adversely impact the flow of credit to the productive sectors of the economy”.
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