India 10Y Yield Hits 3-Year High
The yield on India’s 10-year G-Sec rose more than 1% to 7.38%, reaching its highest level in over three years, as the Reserve Bank of India’s liquidity-tightening measures and hawkish policy shift intensified selling pressure. The central bank plans to sell INR 250 billion in bonds on Tuesday and raise banks’ daily cash reserve requirement maintenance to 99% from 90%, effective October 16, while its foreign-exchange measures could further drain rupee liquidity. The RBI’s recent 25-basis-point rate hike and signals of further tightening have also prompted mutual funds to reduce exposure to longer-dated government bonds, following net sales of INR 378 billion in July-September and a further INR 51 billion in the three sessions after the rate increase. Meanwhile, Brent crude above USD 100 per barrel and expectations of September inflation rising to 5.4% year-on-year added to concerns over price pressures.
38%, reaching its highest level in over three years, as the Reserve Bank of India’s liquidity-tightening measures and hawkish policy shift intensified selling pressure. The central bank plans to sell INR 250 billion in bonds on Tuesday and raise banks’ daily cash reserve requirement maintenance to 99% from 90%, effective October 16, while its foreign-exchange measures could further drain rupee liquidity.
The RBI’s recent 25-basis-point rate hike and signals of further tightening have also prompted mutual funds to reduce exposure to longer-dated government bonds, following net sales of INR 378 billion in July-September and a further INR 51 billion in the three sessions after the rate increase. 4% year-on-year added to concerns over price pressures.