10-Year Bond Yield Rises Ahead of Switch Auction Amid Focus on Liquidity Surplus

Indian Government Bond Yields Rise Marginally Amid Switch Auction

Early trade on April 20 saw India's 10-year government bond yield rise marginally as traders awaited a switch auction worth Rs 30,000 crore. The government plans to convert short-tenor securities into longer-maturity debt during this auction.

At 9:06 am, the 10-year bond yield stood at 6.917 percent, an increase of 2 basis points from its previous close of 6.905 percent. Market participants pointed to a large surplus of liquidity in the banking system as a potential support factor for shorter-duration bonds. According to a Bloomberg Economics index, surplus liquidity stood at around Rs 4.4 trillion as of April 16. This excess cash had climbed to a four-year high earlier this month. The Reserve Bank of India has been conducting short-term liquidity absorption operations to manage the surplus.

Global cues remained mixed, with oil prices rising and the US dollar strengthening amid renewed geopolitical tensions involving the US and Iran.

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Brent crude jumped over 5 percent to around $95 per barrel, rebounding after sharp losses on Friday when Iran had said the Strait of Hormuz was "completely open." Concerns that higher oil prices could fuel inflation weighed on global bond markets, pushing yields higher.

The US dollar also strengthened, regaining safe-haven appeal after easing in recent weeks on hopes of a de-escalation in Middle East tensions.