India Bonds Steady Amid RBI’s Liquidity Absorption Push
· Business · Economic Times, LiveMint
Indian government bonds remained stable on Friday as traders monitored the Reserve Bank of India’s (RBI) plans to sell ₹1 trillion in debt this September, aiming to absorb excess liquidity and strengthen monetary policy transmission. The benchmark 6.94% 2036 bond yield stood at 7.0497%, reflecting cautious sentiment amid expectations of further bond sales and potential rate hikes by the RBI and US Federal Reserve. New Delhi plans to raise ₹280 billion through a bond sale later in the day, including liquid 15-year papers. Traders anticipate yields may not ease below the 7.02%-7.03% range due to ongoing liquidity concerns and global economic uncertainties. The RBI’s recent open market operations have already drained liquidity equivalent to 0.2% of total bank deposits, signaling a proactive approach to managing inflation and liquidity.
Why it matters
The RBI’s aggressive liquidity absorption strategy directly impacts borrowing costs for the government and corporate India, influencing loan rates and economic growth. Investors and market participants must closely watch these moves, as they could affect inflation trends, bond yields, and overall market sentiment in the coming months.
Read the original report — Economic Times
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