RBI Bulletin - August 2020 - ਆਰਬੀਆਈ - Reserve Bank of India
RBI Bulletin - August 2020
The Reserve Bank of India today released the August 2020 issue of its monthly Bulletin. The Bulletin includes Second Bi-monthly Monetary Policy Statement, 2020-21, two speeches, three Articles and Current Statistics. The three articles are: I. Onshoring the Offshore; II. Monetary Policy and Financial Markets: Twist and Tango; and III. Policy Rate Expectations in Media. I. Onshoring the Offshore Several currencies in recent years, particularly those of emerging market economies (EMEs), have emerged as candidates for internationalisation. Over the last three years, EME currencies’ turnover, driven to an extent by the rise of Non Deliverable Forwards (NDF) markets, outpaced global turnover in foreign exchange markets, boosting their global share. Among the EMEs, as per the BIS Triennial Central Bank Survey, 2019, trading in Indian Rupee (INR) has almost doubled in the last three years. Recognising the linkages between onshore and offshore markets, and the possible impact of offshore markets on price discovery onshore, the Reserve Bank is engaged in developing a deep and liquid onshore foreign exchange market. Against this backdrop this article reflects on the recent efforts made in onshoring the offshore. The article provides a comparative overview of NDF markets globally, and provides some insights into the microstructure of the Rupee NDF market. It also discusses cross country approaches to the NDF market including the efforts undertaken by the Reserve Bank. Highlights:
II. Monetary Policy and Financial Markets: Twist and Tango The Reserve Bank of India has initiated two special market operations – Operation Twist (OT) and Long-Term Repo Operations (LTRO) since December 2019 and February 2020 respectively. These two special operations are designed to ensure comfortable liquidity in the financial system and to facilitate monetary policy transmission. This article analyses the impact of these two sets of special operations on money and government securities (GSEC) markets. Highlights:
III. Policy Rate Expectations in Media Micro voluminous data generated on the internet at high frequency has paved the way for new sources of data/ information, which help in providing real time inputs for policy making. Big data tools like text mining and natural language processing techniques facilitate in quantifying such unstructured information. The central bank’s decision on policy rate is keenly awaited by various stakeholders in the economy and receives wide coverage in print and electronic media. This article taps the unstructured text contained in news items and builds a sentiment indicator on policy rate decision. A measure, viz., Sentiment Concentration Class (SCC) was constructed to evaluate media sentiment vis-à-vis directional change in repo rate. Highlights:
(Yogesh Dayal) Press Release: 2020-2021/180 |