The Reserve Bank of India will conduct a fourth round of simultaneous purchase and sale of government bonds on Jan. 23, under its special open market operations being dubbed as ‘Operation Twist’.
Results of Operation Twist
The central bank’s efforts have been only partially successful.
Since announcing the first round of special OMO auctions, the spread between the RBI’s repo rate of 5.15 percent and the prevailing 10-year bond yield has reduced to 145 basis points as on Jan. 16, 2020 from 160 basis points on Dec. 19, 2019, according to Bloomberg data. This remains wider than the historical average.
The spread between the one-year government bond yield and the 10-year now stands at 90 basis points compared to 120 as on Dec.12, 2019.
As of Jan. 16, the yield on the 10-year government bond stood at 6.61 percent while the one-year government bond yield stood at 5.7 percent.
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