Indian bonds steady as states raise record debt
Indian government bonds held steady on Tuesday, even as states borrowed ₹354.5 billion, the highest in over three months—way above what was planned.
The 10-year bond yield nudged up to near 6.60%, reflecting some pressure from all this extra borrowing.
Why does this matter?
When states borrow more than expected, it can push up interest rates and make loans pricier for businesses and regular folks.
Right now, tight cash in the banking system is making things even trickier for anyone needing funds.
What's the bigger picture?
The government is rolling out huge weekly treasury bill auctions through early 2025, but traders worry state borrowing could hit new highs soon.
How's RBI responding?
To keep money flowing, the Reserve Bank of India stepped in—buying ₹50,000 crore in bonds today and offering a massive two-day repo auction worth ₹2 trillion.
Plus, more cash is set to enter banks from RBI's earlier moves, aiming to ease the squeeze on liquidity.