RBI announces 3-day VRRR auction; experts evaluate what’s next for bond markets

On Monday, December 20, the Reserve Bank of India (RBI) said that it will conduct 3-day variable rate reverse repos (VRRRs) auctions - that day the 10-year yield moved from 6.4 percent to 6.47 percent. In an interview to CNBC-TV18, Amandeep Chopra, group president and head of fixed income at UTI MF and Ashish Parthasarthy, treasurer at HDFC Bank spoke at length about what is next for the bond markets given the hawkishness of global central banks, what if our divestment targets fail and government borrows more.

First up, Parthasarathy said that the yield could possibly keep on rising because of tapering and tightening.

Meanwhile, Chopra said, “The Monday move, on many levels, created a bit of volatility because this has been a tight liquidity environment.”