Bond yields rise, rupee strengthens a day after monetary policy

The rupee rose to a 20-month high against the US dollar, closing at 64.28

Bond yields have started moving up after the Reserve Bank of India (RBI) tightened its rate corridor on Thursday. 

Some market participants said they expect the 10-year yields to touch 7 per cent from the Friday close of 6.81 per cent. As yields rise, prices of bonds fall.  The rupee, meanwhile, continued to strengthen and rose to a 20-month high, as the dollar remained largely stable, despite geo-political tensions in Syria. Foreign investors continued to buy local equities and bonds. 

This is because even with ample liquidity around, short-term rates have started inching up and the RBI’s policy language indicated that chances