In this edition of Bond Compass, we highlight the key themes for Apr : • India G-sec yields continued lower in April, with moves lower pronounced in the near end of the curve. This was aided by ample liquidity in the system – helped by pickup in month-end GOI spending as well as on RBI’s injection of durable liquidity through OMO purchases. • Pickup in durable liquidity through OMOs was likely to offset the impact of maturing short position in dollar forward book (much of the maturity in outstanding forwards is in less than 1Y tenor – which were allowed to mature instead of being rolled over, likely on comfort over weak dollar).
