Call money rates, bond yields and the rupee have climbed in the past few days. The cancellation of the open market operation as well as the ratings upgrade has helped bond yields ease. The massive excess liquidity generated in the wake of demonetisation has begun to dry up thanks to some deft handling of the money market by the central bank. However, the reduction in excess liquidity has been happening since around May. Some of the recent hardening of yields seems to be driven by fears in trading rooms that inflation will breach the central bank’s target.

Source: Mint November 28, 2017 18:22 UTC