(Video) Rajya Sabha TV (RSTV) The Big Picture: RBI’s Operation Twist

Topic: RBI’s Operation Twist

Guest:

Ashok Nag, (Former Advisor, RBI)
Dr. Subhash Chandra Pandey, (Former Special Secretary, DIPP)
A. K. Bhattacharya, (Editorial Director, Business Standard)

Topic Description:

The Reserve Bank of India will conduct a simultaneous sale and purchase of bonds, it said on Thursday, in a move seen by market participants as an attempt to bring longer-term yields lower. It is the first time the RBI has conducted a special open market operation (OMO) of this kind, similar to the 'Operation Twist' carried out in the United States near the start of the decade. Bond yields have been rising since the RBI unexpectedly left its key repo rate unchanged earlier this month, even as it slashed its forecast for economic growth to its lowest in over a decade. The RBI said it will buy 100 billion rupees' worth of the current benchmark 10-year bond while selling four bonds maturing in 2020 for an equivalent amount. The central bank said it had decided to conduct the special OMO after reviewing the liquidity & market situation and assessing financial conditions.