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Indian bond yields hold steady ahead of RBI MPC decision

Investors are watching a ₹268.5 billion state bond auction for signals on demand before the RBI’s decision due August 5, with the repo rate expected to remain at 5.25%.

Reported · Written up by our desk · Central Banks

Indian government bond yields were little changed on Tuesday, August 4, as investors stayed cautious ahead of the Reserve Bank of India’s monetary policy decision.

The benchmark 6.94% 2036 government bond yield was nearly flat at 6.8346%. Reuters reported Indian states are scheduled to raise ₹268.5 billion through bond sales later in the day, which could indicate investor appetite for debt.

The RBI’s Monetary Policy Committee began a three-day meeting on August 3 and is set to announce its decision on August 5. Economists broadly expect the RBI to keep the repo rate unchanged at 5.25%.

A Reuters account cited by LiveMint also pointed to moderating inflation and growth uncertainties since the June review, but said global factors remain a drag, including moves in crude oil and elevated US Treasury yields. Foreign portfolio investors have also shifted to net selling, offloading more than ₹34 billion of Indian bonds last week, even as inflows under the RBI’s foreign currency deposit scheme for non-resident Indians totaled $36.7 billion so far, according to the report.

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