For a year and a half, money market rates were tethered to their lowest ever, after the Reserve Bank of India cut the repo rate to 4 per cent and the reverse repo rate to 3.35 per cent, and started buying government debt through open market operations to enhance liquidity conditions in order to tackle the economic shock of Covid-19.... But interest rates in the shorter term are on the rise since September-end. There is a very slight uptick in the rate at which banks lend to each other for immed

He blamed the market microstructure in India, where ‘buy and hold’ and ‘long only’ investors prevail, for this.... “ We need to develop a yield curve that is liquid across tenors, ” he stressed.To prevent the G-secs liquidity from drying up during periods of rising interest rates or in times of uncertainty, the governor stressed alternatives.... However, he noted that the ‘swaptions’ product is gaining traction....