India 10Y Yield Hits 4-Month High
The yield on India’s 10-year G-Sec rose to around 7.1%, reaching more than four-month highs, as a sharp selloff in US Treasuries and expectations of further RBI liquidity tightening added to upward pressure on domestic yields. Market participants cited the surge in US yields after stronger economic data revived inflation concerns. Brent crude also climbed back above $100 a barrel, adding to domestic inflation risks and expectations of an RBI rate hike at its October policy meeting. Meanwhile, the RBI has reportedly conducted at least $10 billion in sell-buy FX swaps in recent weeks to drain excess rupee liquidity, while surplus banking liquidity had reached a record INR 11 trillion earlier this month. The central bank’s continued efforts to absorb excess cash are expected to keep domestic borrowing costs elevated.
1%, reaching more than four-month highs, as a sharp selloff in US Treasuries and expectations of further RBI liquidity tightening added to upward pressure on domestic yields. Market participants cited the surge in US yields after stronger economic data revived inflation concerns. Brent crude also climbed back above $100 a barrel, adding to domestic inflation risks and expectations of an RBI rate hike at its October policy meeting. Meanwhile, the RBI has reportedly conducted at least $10 billion in sell-buy FX swaps in recent weeks to drain excess rupee liquidity, while surplus banking liquidity had reached a record INR 11 trillion earlier this month.
The central bank’s continued efforts to absorb excess cash are expected to keep domestic borrowing costs elevated.