India's rupee hits a one-month high of 94.40 per dollar as October bond yields jump

Yields on shorter-dated government bonds rose the most in October

A bond yield is the return investors demand to lend to the government. Higher yields mean higher borrowing costs. These monthly averages come from government bond trades recorded in the Reserve Bank of India's (RBI) Subsidiary General Ledger:

• 1-year: 6.60%, up from 6.14% in September and 5.68% in June
• 5-year: 7.44%, up from 6.93% in September
• 10-year: 7.41%, up from 7.17% in September and 6.74% in June
• 30-year: 7.84%, up from 7.65% in September

Short and medium maturities rose about 45–50 basis points (hundredths of a percentage point) in one month. The long end rose roughly 20–25 basis points. The October average 5-year yield is now slightly above the 10-year.

The rupee firmed against the dollar, euro and yen

The RBI's daily reference rate was 94.3996 rupees per dollar on 5 November, compared with 94.8416 the day before. The 0.47% gain was the rupee's biggest daily move in weeks. The rate stood at 96.77 on 8 October. The rupee also firmed against the euro, to 106.33 from 106.53, and against the yen, to 0.5979 from 0.5999.

Banks are again lending spare cash to the RBI

In overnight variable rate reverse repo auctions, banks lend surplus cash to the RBI. These auctions resumed after a gap from 15 October to 3 November. The RBI accepted 23,905 on 3 November and 51,195 out of 75,087 bid on 4 November, in the units it reports. That is far below the 255,827 accepted on 7 October. It suggests that spare cash is building again in the banking system after a squeeze in late October.

State Bank of India's instant payment volume rose in October

The National Payments Corporation of India (NPCI) runs the Immediate Payment Service (IMPS), which handles instant bank transfers. NPCI figures show State Bank of India's IMPS volume at 78.51 million transactions in October, up from 72.27 million in September.