FX.co ★ India 10Y Yield Hits 9-Month High

The yield on India's 10-year government securities has climbed to approximately 6.66%, marking its highest point in nine months. This rise comes as investors consider the substantial state borrowing scheduled for this week. Indian states are poised to raise 332.2 billion rupees through bond sales on Tuesday, a figure that surpasses the previously set amount by nearly 25%, further intensifying concerns over supply pressures. This quarter, states have already raised about 1.8 trillion rupees through debt issuance, resulting in an upward movement in yields. On the policy landscape, the minutes from the Reserve Bank of India’s December meeting highlighted projections of a possible slowdown in economic growth for the coming year, accompanied by tempered inflation, which could provide room for additional interest rate cuts. Traders are now anticipating further liquidity injections before the end of the month, following the central bank's injection of 1.45 trillion rupees this month via debt purchases and forex swaps. Concurrently, foreign investors have continued their sell-off, with net outflows totaling 109 billion rupees this month so far.