Bond yields traded higher on Friday amid the Reserve Bank of India (RBI) has raised the cash reserve ratio in an incremental 10 per cent in proportion to banks’ liquidity. Reserve Bank Governor Shaktikanta Das has said the move, announced along with the bi-monthly policy review, was the best option under the current circumstances and there is enough liquidity in the system for the banks to continue their lending operations.
In the global market, treasury yields popped on Thursday, as the July consumer price index report provided another encouraging sign that inflation is abating. Furthermore, oil prices settled lower on Thursday, with Brent crude holding close to January highs, as speculation about another U.S. interest rate hike faded following inflation data and OPEC remained positive on the oil demand outlook.
Back home, the yields on new 10 year Government Stock were trading 4 basis points higher at 7.19% from its previous close of 7.15% on Thursday.
The benchmark five-year interest rates were trading 4 basis points higher at 7.17% from its previous close of 7.13% on Thursday.