Operation Twist: RBI’s Open market operations

  • IASbaba
  • December 20, 2019
  • 0
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Operation Twist: RBI’s Open market operations

Part of: GS Prelims and GS-III- Economy

In News

  • RBI will simultaneously buy and sale government securities worth ₹10,000 crore under its open market operations — a move aimed at managing the yields.
  • The RBI will purchase the longer-term maturities, that are trading at a spread of 150 bps (basis points) over the repo rate, and sell the shorter duration ones
  • RBI will buy ₹10,000 crore of 6.45% government bondsmaturing in 2029 so that the yield of these long-term papers will soften
  • It will simultaneously sell ₹10,000 crore of short-term bonds maturing in 2020.
  • Operation Twist is a move taken by U.S. Federal Reserve in 2011-12 to make long-term borrowing cheaper.

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