Operation Twist: RBI’s Open market operations
Part of: GS Prelims and GS-III- Economy
- 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.