# India bonds dip as RBI's diaspora swap move dents sentiment — retained record

> Retained news record from news:india-et-markets.

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source: [news](https://highsignal.app/data/news) (news:india-et-markets)  published 2026-08-17 05:58 ingested 2026-08-17 06:41

[original source ↗](https://economictimes.indiatimes.com/markets/bonds/india-bonds-dip-as-rbis-diaspora-swap-move-dents-sentiment/articleshow/133288178.cms)

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The yield on the benchmark 6.94% 2036 bond jumped 3.5 basis points to 6.7909% by 10:45 a.m. IST. Bond yields move inversely to prices.
Still, traders said the 10-year yield was unlikely to rise above 6.80%, with value buyers protecting 6.7950%.
Early Monday saw a dip in demand for Indian government bonds following the RBI's closure of its swap window. This decision caused the benchmark bond yield to surge, hindering a crucial source of demand. Inflows exceeding $52 billion resulted in foreign exchange reserves hitting a four-month peak. Additionally, the surplus of banking system liquidity saw a threefold increase, while swap rates escalated.
The RBI on Friday advanced the deadline for banks to access its concessional forex swap facility for hedging diaspora foreign-currency deposits, after inflows surpassed $52 billion. Lenders now have until August 31 to use the zero-cost hedging facility.
The swap facility was part of a broader package of measures announced in June to bolster India's balance of payments. The inflows have also helped lift India's foreign-exchange reserves to a four-month high of $707 billion as of August 7.
India's banking-system liquidity surplus has also tripled to 3.1 trillion rupees in August from nearly 1 trillion rupees in July.
"Most FCNR(B) inflows had gone into four- to six-year bonds, which could face strong selling pressure because of the early closure of the swap window," a private-bank trader said.
Brent crude also edged higher in Asian trade, nearing $90 a barrel as uncertainty over U.S.-Iran peace talks persisted and tanker traffic through the Strait of Hormuz remained disrupted.
Traders now await minutes of the RBI's August monetary policy decision due on Wednesday for fresh cues.
RATES India's overnight index swap rates rose sharply after the early closure of the swap window, which also amplified selling in bonds, traders said.
The one-year swap rose 5 bps to 5.78%, the two-year rate was up 6.25 bps at 5.9850%, and the five-year rate gained 7.75 bps to 6.3250%.
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document fetched 2026-08-17 06:41