The Reserve Bank of India (RBI) said it is \u201cready to inject adequate additional liquidity\u201d into the system as the financial year draws to a close on a day the yield on the new 10-year benchmark government security (g-sec) jumped up 12 basis points (bps) in intra-day trade over its previous close. The last time the yield witnessed a larger upswing was on February 1, when it rose 18 bps on the day of the presentation of the Union Budget. The 10-year benchmark yield closed at 7.568% on Thursday, 7 bps higher than the previous day\u2019s close of 7.491%, on worries of capital flowing out of emerging-market econo-mies as yields on the US Treasury hardened. A rise in the price of crude also weighed, with Brent crude hitting an intra-day high of $65.15 a barrel, up 1.23% from its last close. In a communication hours ahead of the close of trading, the central bank said, \u201cWith a view to address any additional demand for liquidity on account of increase in currency in circulation and advance tax payments by corporates and to provide flexibility to the banking system in its liquidity management towards March-end, the Reserve Bank of India stands ready to inject adequate additional liquidity using a combination of appropriate instruments, while continuing with its normal Liquidity Adjustment Facility (LAF) operations.\u201d The RBI also said, as a special case, standalone primary dealers will be allowed to participate along with other eligible participants in the last regular term repo auction of FY18, which will be conducted on March 28, within the usual notified amount. While an increase in demand for liquidity at the fag end of a financial year is a routine affair, such messaging from the central bank is not. Market participants saw it as the regulator's message to banks to not worry or speculate about liquidity at a time when credit growth seems to be turning the corner. Ashutosh Khajuria, executive director and chief financial officer, Federal Bank, said, \u201cCredit growth after a long time is quite positive, having moved into double-digit territory from single-digit growth. Incremental credit-deposit ratio is more than 100% and that has been the case for the last five-six fortnights, going up to 150% in some fortnights. That would certainly result in some liquidity tightness.\u201d As for the yield on the g-sec, analysts expect the upmove to continue, under the impact of higher inflation, a rebound in crude prices and the hardening of US Treasury yields. Rating agency Icra said that the volatility seen in recent months will ease. In a report on Thursday, it said, \u201cWith the end of the announced g-sec auctions for FY2019, yields may stabilise to some extent in the rest of this fiscal. In Icra\u2019s view, while the sharp intra-day and intra-week volatility witnessed over the last two-three months may abate going forward, the g-sec yields would remain elevated over the near term.\u201d Icra expects the new 10-year benchmark g-sec to trade in a range of 7.35-7.65% over the next eight months.