The yield on the benchmark 10-year bond has fallen below 6%. The Reserve Bank of India’s decision to step up purchase of government securities under the government securities acquisition programme (G-SAP) had been one of the great reasons behind this reduction of yield.
Context
The yield on the benchmark 10-year bond has fallen below 6%. The Reserve Bank of India’s decision to step up purchase of government securities under the government securities acquisition programme (G-SAP) had been one of the great reasons behind this reduction of yield.
Background
Bond yield
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Analysis
Relation between bond yield and market
G-SAP and the bond yield
What is Government Securities Acquisition Programme (G-SAP)? To maintain RBI’s commitment towards the current accommodative policy stance, the RBI launched the Government Securities Acquisition Programme (G-SAP).
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Impact of reduced yield on markets and investors
Role of RBI in keeping a lower limit
Conclusion
During the “taper tantrum” episode of 2013, the Indian bond yields spiked and the value of the rupee collapsed within a few months. India’s macro position and external accounts are in much better shape than in 2013. Nevertheless, Indian markets will not be immune to any such shocks in the global sphere. Over the medium term, inflation and potential monetary policy normalisation will also play a major role in shaping the interest rate trajectory.
Verifying, please be patient.