OMO - Latest News Update, Information, Photos & Videos on OMO at Lokmat Times

According to bond market dealers, the immediate impact of RBI's announcement was that yield of 2029 bonds fell 15 basis points (bps) to 6.60 per cent on Friday. But, yield on the 2020 bond jumped up 20 basis points. Also, yield of 2033 bonds fell 17 bps. 100 bps is equal to 1 per cent.Market experts Anand K Rathi said the rate cut advantage that RBI will get on its long term bonds would give it enough elbow room to pass on the benefits to consumers and businesses.The Reserve Bank of India announced a simultaneous purchase and sale of government securities under open market operations (OMOs) for Rs 10,000 crore each on December 23.The operation is likened to the Federal Reserve's 'operational twist' which involved swapping short-term treasury securities for long-term government debts conducted in 2011-12.Under its OMO operations, RBI will sell short-term securities worth Rs 10,000 crore maturing next year and purchase long-term securities of an equal amount maturing in 2029.Bond market participants point out that RBI's move is to target term spreads or the difference between the 10-year bond yield and that of a one-year treasury bill.Brickwork Ratings had said that RBI has taken the decision to contain the rising yields on the longer end of the yield curve by strategically arranging this debt-to-money market swap."The move will improve both liquidity and bond yields as it will suck out the government bonds of long duration (10 years) and pump in short duration (about 6 months) worth Rs 10,000 crore through special OMO," it said."More such swaps may follow as it might prevent steepening of the yield curve (which could be on account of expectations of higher fiscal deficit) even as it improves liquidity for the long-term investors and provides flexibility to government Of India in raising long term resources for managing the fiscal deficit," Brickwork said.Siddhartha Khemka, Head-Retail Research, Motilal Oswal Financial Services, said market sentiments got boosted post RBI decision to conduct a special open market operation (OMO) to bring down long-term yields which was cheered by the market with gains in banking stocks."The RBI would buy Rs 10,000 crore worth of the current benchmark 10-year bond while selling four bonds maturing in 2020 for an equivalent amount on December 23, 2019. This will bridge liquidity gap and lower rates without expanding the RBI's balance sheet," Khemka said.( With inputs from IANS )

Home

City

Latest News

Cricket

LT Premium

National

International

Maharashtra

Opinions

Chhatrapati Sambhajinagar

Nagpur

Entertainment

Photos

Business

Technology

Sports

Lifestyle

Social Viral

Lokmat Games

Health

Narendra Modi

Lok Sabha Election 2024

Heatwave In India

Mumbai Water Cut

Maharashtra Lok Sabha Election

IPL 2024

OmoFOLLOW

Omo, Latest News

Business :RBI's 'operation twist', Jharkhand results to sway indices (Market Outlook)

Higher liquidity inflows on the back of the Reserve Bank's 'operation twist' along with Jharkhand Assembly election results will influence the Indian equity market movements during the truncated week ahead, experts said. ...

Business :RBI's 'operational twist' version reduces long-term yield

An immediate impact of RBI's version of 'operational twist' brought down 10-year bond yield by 15 basis points, giving a leg-up to the government in borrowing cheap. ...