Q. The “Operation Twist” often seen in news is related to which of the following?

[A] Buy Buying foreign assets

[B] Foreign trade

[C] Lines of Credit

[D] Buy and sale of government securities

Answer: D

The Reserve Bank of India (RBI) will simultaneously buy and sale government securities worth ₹10,000crore each in December 2019 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, so that the yield of these papers will soften and sell the shorter duration ones. 
  • The central bank said it will buy ₹10,000 crore of 6.45% government bonds maturing in 2029 and 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. 

Source: The Hindu