FX.co ★ India 10Y Yield Eases Ahead of Inflation Data

The yield on India’s 10-year G-Sec eased to around 6.73%, drifting lower from the previous session as traders kept positions largely rangebound ahead of the January inflation release. Consumer price inflation is expected to rise to 2.4%, remaining comfortably within the RBI’s 2%–6% target band, which has helped contain upward pressure on yields.

At the same time, the broader liquidity environment, supported by earlier RBI measures, has prevented a more pronounced increase in yields. However, sizeable state borrowings and upcoming government debt auctions continue to underscore supply concerns.

Investors are closely watching the RBI’s next policy signals, especially after the central bank left the repo rate unchanged at its February meeting and refrained from announcing new liquidity operations. Over the past month, the 10-year yield has risen by about 13 basis points but remains broadly unchanged compared with its level a year ago.

Going forward, market participants will focus on RBI liquidity management, forthcoming inflation prints, and the pace and composition of sovereign and state debt supply.