A conspicuous silence from the Reserve Bank of India regarding support for the nation’s bonds has left traders wondering whether the recent gains in yields is a new normal.
The central bank may be trying to increase the attraction of sovereign debt by letting yields rise, according to PNB Gilts Ltd. The benchmark 10-year bond yield advanced to 5.97% on Wednesday, the highest since May.
If that’s true, the RBI would be treading a delicate balance as a prolonged absence from the market could raise questions over support for the government’s record Rs 12-trillion ($160 billion) debt