From The Economic Times · Reuters · · 1m 30s
India 10-year bond yield hits 7.35% as RBI tightens liquidity
RBI's liquidity clamp down pushes Indian bond yields to 7.35% in three-year high.
In brief
RBI's liquidity clamp down pushes Indian bond yields to 7.35% in three-year high. India's 10-year bond yield reached 7.35%, the highest in three years, after RBI's liquidity measures tightened banking system cash reserves. Originally reported by The Economic Times.
Indian government bonds fall sharply
Indian government bonds fell sharply on Monday as central bank measures to drain liquidity weighed on demand.
10-year bond yield hits 7.3707%
The benchmark 6.94% 2036 bond yield rose to 7.3707%, highest in three years, by 10:20 a.m. IST from 7.2994% on Friday.
RBI tightens liquidity measures
The Reserve Bank of India will sell 250 billion rupees ($2.58 billion) of bonds on Tuesday and require banks to maintain 99% of their daily cash reserve requirement from October 16, up from 90%.
Yield rises for eight weeks
The yield has risen for eight consecutive weeks, gaining 54 basis points during the period.
RBI signals temporary surplus cash
At its policy meeting, the central bank announced no measures to drain liquidity, with Governor Sanjay Malhotra saying the surge in surplus cash would be temporary.
RBI tightens rupee liquidity
The RBI sought to temper pressure on the rupee by allowing oil marketing companies to buy dollars directly from the central bank through a special window, and tightened hedging rules.
Inflation trajectory impacted
The benchmark Brent crude price stayed above $100 per barrel, which could impact oil-import-dependent India's inflation trajectory and government finances.
The essence
India's 10-year bond yield reached 7.35%, the highest in three years, after RBI's liquidity measures tightened banking system cash reserves.
