RBI to continue ‘operation twist’ for second week; sovereign bonds rally high

Benchmark sovereign bonds gained in India after the central bank said it will buy long-end debt for a second week, stepping up the pace of its unconventional policy to lower borrowing costs.

Benchmark sovereign bonds gained in India after the central bank said it will buy long-end debt for a second week, stepping up the pace of its unconventional policy to lower borrowing costs. The 10-year yield slid 7 basis points to 6.51%, taking the week’s drop to nine basis points. The Reserve Bank of India is embracing a Federal Reserve-style Operation Twist, where it buys long-end debt while selling short-end bonds after five rate cuts this year failed to lift economic growth. It will conduct a second operation on Monday, following on its first such move earlier this week.

The announcement, which came late Thursday, was earlier than most traders expected, according to Anindya Das Gupta, Mumbai-based managing director and head of treasury at Barclays Plc.

“I think the expectation from Twist goes up to one trillion rupees,” he said. “The back-to-back purchases is probably to pace it if they have to do it over 10-12 weeks.”

Benchmark sovereign bonds gained in India after the central bank said it will buy long-end debt for a second week, stepping up the pace of its unconventional policy to lower borrowing costs. The 10-year yield slid 7 basis points to 6.51%, taking the week’s drop to nine basis points.

The Reserve Bank of India is embracing a Federal Reserve-style Operation Twist, where it buys long-end debt while selling short-end bonds after five rate cuts this year failed to lift economic growth. It will conduct a second operation on Monday, following on its first such move earlier this week.

The announcement, which came late Thursday, was earlier than most traders expected, according to Anindya Das Gupta, Mumbai-based managing director and head of treasury at Barclays Plc. “I think the expectation from Twist goes up to one trillion rupees,” he said. “The back-to-back purchases is probably to pace it if they have to do it over 10-12 weeks.”