Bond yields ease on liquidity hopes

MUMBAI: Hopes of the Indian central bank taking measures to ease tight liquidity, following comments from a deputy central banker sent federal bond yields down on Tuesday, with global risk aversion also aiding sentiment.

The new 10-year bond yield ended 8 basis points lower on the day at 8.88%, after moving in a 8.87-8.97% range.

" Bonds are rallying on hopes of open market operations (OMO), because only that can help any further auctions," said Anoop Verma, an associate vice-president at Development Credit Bank.

Total volumes on the central bank's electronic trading platform were sharply higher at 17,340 crore ($3.4 billion) compared with the daily average of 9,000-10,000 crore. India's central bank will take action to ease any strain on liquidity, deputy governor Subir Gokarn said earlier, adding the Reserve Bank of India's objective is to manage liquidity.