Reuters Market Eye - India's benchmark 10-year bond prices erase almost all of their gains in the session as the rupee weakens below the psychological level of 60 per dollar.
The 10-year bond yield trading at 8.13 percent, flat on the day, after earlier falling to as low as 7.99 percent when the RBI kept rates on hold and suggested it will pare back its liquidity-tightening measures and resume focus on growth once currency stabilises.
However, the absence of any concrete action weakens the rupee, which has now erased all gains since the RBI first announced tightening steps on July 15.
Traders say the bond market will closely track moves in the rupee for direction.
(Reporting by Swati Bhat)