RBI To Conduct Another OMO Operation Feb 25

The RBI have confirmed it will conduct simultaneous purchase and sale of government securities, another operation twist, under the banner of OMOs. The operation will see the purchase and sale of INR 100bn each on February 25. The operation will feature purchase of 3 maturities and sell two maturities that equal the same amount.

• The RBI said it made the decision after a review of current liquidity and financial conditions. Operation Twist involves purchasing longer maturities of government securities and selling equal amount of shorter maturities.
• The previous OMO saw yields fall, especially in the 10-year sector where the purchases were concentrated. The RBI conducted the purchases at lower yields than the prevailing rate which helped support demand. The RBI conducted OMOs on Feb 10 for INR 200bn.