• On Friday, the 10-year benchmark government bond (6.48% GS 2035) opened steady at 6.58% ahead of IGB weekly auction. • Over the day, market participants continued to book profit. The Weekly auction cut-off came mixed, with cut-off coming better than expected in the long end paper 7.09% GS 2074 while the short-duration 6.01% GS 2030 cut-off came weaker than expected. • However, the sharp recovery of the rupee against the dollar prevented further fall in gilt prices. INR appreciated to close at 89.65/$ after hitting 90.29/$ during the day on the back of aggressive RBI intervention. • Meanwhile, the RBI MPC minutes were in alignment of the Dec policy signalling that further rate cuts remain possible. However, MPC members were not pre-committed in hitting at the rate cut, suggesting that the decision is likely to stay data dependent. • The latest banking system liquidity stands in deficit of ~INR 299.10 Bn. The 10Y point closed 3bps higher at 6.60% vs 6.57%
