India attracts $136.38 billion in FX inflows, boosting bond yields to 6.95%
Large dollar inflows strengthened Indian rupee liquidity and pushed short-term bond yields down, but the stock market still closed in negative territory.
Indian government bonds rose on Thursday morning after large foreign currency inflows boosted rupee liquidity. The central bank's special schemes attracted $136.38 billion, with banks alone raising $127.23 billion through non-resident deposits. These funds mostly remain in the system for three to five years. Consequently, short-term debt demand surged. The yield on the benchmark 2036 bond fell from 6.9754% to 6.9502%. The five-year bond yield dropped eight basis points to 6.48%. However, these gains occurred against a backdrop of global bond selloffs and rising oil prices that renewed inflation fears. In equity markets, the Sensex tumbled 417 points to close at 76,153. Nifty 50 fell 41 points to end at 23,873. Major indices like Nifty Smallcap 100 outperformed, gaining more than one percent. Banking and realty stocks led the equity decline.
