Benchmark yield softens 5 Bps to 6.52%

Synopsis

Lower US yields and expectations of a rate cut by RBI in its monetary policy next week have also weighed on yields, treasury heads at banks said.

Mumbai: Yield on the 10-year benchmark government security softened 5 basis points to 6.52% on Wednesday, after the Reserve Bank of India announced liquidity infusion of ₹80,000 crore via open market operations (OMO) on Tuesday. On an intra-day basis, the yield touched 6.48%, its lowest in three years, Clearing Corporation of India data showed.

Lower US yields and expectations of a rate cut by RBI in its monetary policy next week have also weighed on yields, treasury heads at banks said.

"The OMO announced last night was unexpected, as liquidity has been comfortable in the past few days and this prompted softening of yields. There may also be some short covering since the level of 6.55% was breached; this may have added to the softening of yields," said Gopal Tripathi, head of treasury at Jana Small Finance Bank.

Agencies

RBI will have its first ₹20,000 crore OMO purchase auction on Thursday.

The bond market was in a positive mood on the first day of trade in the new fiscal year. However, traders do not expect a sharp softening in yields in the near future.

"We have crossed the 6.50% level and I think yields may further soften 2-3 basis points. After the policy, I expect the range to be between 6.45% and 6.55%," said a bond trader from a private sector bank.

The Indian rupee closed at 85.50 to the dollar on Wednesday, slightly weaker from its previous close of 85.47, LSEG data showed. Markets now await the announcement of US reciprocal tariffs which could add pressure on the rupee.

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