The yield on 10-year benchmark bond Friday fell 13 basis points (bps) to 6.60 per cent after the Reserve Bank of India (RBI) decided to conduct its version of ‘Operation Twist’ for the purchase and sale of government securities under Open Market Operations (OMO) for Rs 10,000 crore each on December 23. Bond yields have been rising after the central bank unexpectedly left key rates unchanged on December 5, even as it slashed its forecast for economic growth to its lowest in over a decade. ‘Operation Twist’ is the name given to a US Federal Reserve monetary policy operation that involved the purchase and sale of government securities to boost the economy by bringing down long-term interest rates. The RBI has decided to purchase Rs 10,000 crore worth of one security — the 6.45 per cent GS 2029. This is a long term 10-year bond. On the sell side, it has proposed to sell four securities for a total of Rs 10,000 crore — 6.65 per cent GS 2020, 7.80 per cent GS 2020, 8.27 per cent GS 2020 and 8.12 per cent GS 2020. All these four securities are short term, and maturing in 2020. Meanwhile, the rupee fell by 9 paise to close at 71.12 against the US dollar on Friday due to a steady rise in crude oil prices, strong dollar overseas and the RBI decision to conduct a special OMO.
