(Dec 24): Indian bonds rallied the most in four months on Wednesday (Dec 24) after the central bank announced fresh measures to boost banking-system liquidity, including government bond purchases and a foreign-exchange swap. The Reserve Bank of India said Tuesday evening that it will buy two trillion rupees (RM90.71 billion) of bonds in four tranches over December and January, and hold a US$10 billion (RM40.64 billion) foreign-exchange swap next month. Lenders’ overnight borrowing costs rose sharply this week as liquidity tightened following tax outflows and the RBI’s dollar sales to shore up the rupee. Banking-system liquidity slipped into a deficit of 727 billion rupees on Dec 22, from a surplus of 2.6 trillion rupees earlier this month, according to data compiled by Bloomberg Economics. Wednesday’s rally follows a period of strain for the bond market, driven by concerns over a potentially sharp rise in state debt supply.

Source: The Edge Markets December 24, 2025 04:21 UTC