• The 10-year benchmark government bond (6.48% GS 2035) opened flat at 6.96% ahead of the weekly gilt auction. • Over the day, the 10Y point bounced 7% after the announcement of a variable rate reverse repo (VRRR) by the RBI of INR 2 trln. • Meanwhile, traders covered their shorts after the weekly auction witnessed robust demand. The 10-year benchmark 6.48%, 2035 gilt auction cut off came at 6.9655%. • INR depreciated for the second consecutive trading day on dollar buying by oil importers amid uncertainties related to the durability of the two-week West Asia ceasefire. INR ended at 92.73/$ compared to 92.66/$. • The 10Y yield closed 5bp lower at 6.91% vs 6.96%. The latest banking system liquidity stayed in surplus of ~INR 4553.54 Bn.
