Home RBI’s special OMO may cap yield curve steepening – Citibank
FXStreet News

RBI’s special OMO may cap yield curve steepening – Citibank

Citibank’s India Economist Samiran Chakraborty, offers his take on the Reserve Bank of India’s (RBI) consistent special OMO auctions and its impact on the yield curve.

Key Quotes:

“Purpose of Operation Twist is not just to address any short-term misalignments in the yield curve but it could become a more fundamental tool for improving monetary transmission by lowering the borrowing cost for the government and may be eventually for rest of the economy,”

“Yield to remain capped around 6.50%.“

“A caveat here is that the market participants expect more of “Operation Twist” at least in the run up to the budget, so any disappointment on that front may hurt the fixed income sentiment in spite of easy liquidity conditions.”

RBI is scheduled to conduct its third special OMO next week, where it will buy bonds maturing in 2024, 2026 and 2029 and sell 2020 maturity notes.

FX Street

FX Street

FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions.