FX.co ★ India 10Y Yield Falls Amid RBI Liquidity Infusion

The yield on India's 10-year government securities decreased to approximately 6.66%, retreating from recent multi-month highs. This movement was largely influenced by the anticipation of continued liquidity support from the Reserve Bank of India, which in turn increased demand for government bonds. To date, the central bank has injected over INR 9.1 trillion (equivalent to USD 100 billion) into the financial system during this fiscal year. This was achieved through bond purchases, foreign-exchange swaps, and a reduction in banks’ reserve requirements. Investors expect further measures in the coming months, including additional open market operations and foreign exchange interventions. However, this decline in domestic yields was partially counterbalanced by a rise in US Treasury yields, which have surpassed 4.25%. This increase is attributed to renewed uncertainties regarding potential European retaliation against US trade policies and tariffs concerning Greenland.