Corporation tax cut: Bond yields may harden, rupee likely to remain stable

The liquidity framework is expected to make rate management conditioned on the prevailing liquidity in the system

The rupee is likely to remain around the present level, whereas bond yields could inch up to 7 per cent level in the near term on concerns of widening fiscal deficit, according to currency and bond dealers. 

Finance Minister Nirmala Sitharaman last week cut corporation taxes, which would result in foregone revenue of about Rs 1.45 trillion. The 10-year bond yields had shot up 15 basis points to close at 6.78 per cent on Friday in response. The yields closed at 6.75 per cent on Monday, as investors bought bonds ahead of the release of a revised liquidity framework report