The benchmark 10-year bond yield rose on Tuesday after the central bank said upside risks to its January 2016 inflation target of 6 per cent are significant and its future policy stance will be influenced by this inflation target.
The central bank also said it would cut the ceiling on bonds that must be held-to-maturity from the current 24 per cent to 22 per cent in stages starting in the bi-weekly cycle beginning January 10, 2015. It expects to complete the process by September 2015.
By 11:10 a.m. (0540 GMT), the benchmark 10-year paper was at 8.50 per cent, up 3 basis points from pre-policy levels.
The rupee was little changed at 61.71 per dollar versus 61.67 just before the policy.
A lower opening at the domestic equity market and the dollar’s rise against other major currencies overseas also put pressure on the rupee, dealers said.
Yesterday, the rupee had tanked 38 paise to log nearly 7-month closing low of 61.53 against the greenback following dollar demand from importers and some weakness in stocks ahead of the RBI policy review.