MUMBAI (Reuters) - Government bonds slumped and interest rate swaps surged, while the rupee posted modest gains after the RBI took steps to rein in rupee liquidity, in a move that will raise interest rates in the economy.
The most traded 8.33 percent 2026 bond yield rose as much as 59 basis points to 8.26 percent. It was last trading at 8.04 percent versus 7.67 percent at close on Monday.
Interest rate swaps surged, with the 1-year swap rate rising 85 bps to 8.45 pct. The 5-year rate rose 56 bps to 8.15 percent.
The rupee rose to 59.36 per dollar compared with previous close of 59.89/90.
The Reserve Bank of India announced measures late on Monday to curb the rupee's decline by tightening liquidity and making it costlier for banks to access funds from the central bank.
(Reporting by India Markets Team; Editing by Prateek Chatterjee)
