Indian government bonds gave up most early gains on Thursday as stronger-than-expected dollar inflows from a central bank scheme were offset by a fresh spike in oil prices.The benchmark 6.94% 2036 bond yield settled at 6.9646%, versus 6.9754% on Wednesday, after falling to 6.9323% intraday. Bond yields move ‌inversely to ⁠prices.Shorter maturities ⁠outperformed, with the five-year yield falling 4 basis points to 6.5216%.Traders covered short positions ​earlier in the session, snapping a five-day selloff, after India drew a larger-than-expected $136.38 billion under ​the central bank's dollar-attracting schemes between June 5 and August 31.The inflows pushed the banking-system liquidity surplus to a record 9.7 trillion rupees and lifted the rupee 0.5% to 94.4850 per dollar.Analysts ⁠said the ‌dollar boost would strengthen the Reserve Bank of India's ability to support the rupee and could push the balance of payments ⁠into surplus."Market focus has now shifted to the consequences ​of these inflows for RBI's liquidity stance and operations," ​ICICI Securities Primary Dealership said, estimating that system liquidity could peak above 10 trillion rupees before easing to 8-8.5 trillion rupees by month-end.The RBI has conducted 28 variable-rate reverse repo operations since August 5 to drain excess cash, but traders expect more stringent measures.The Primary Dealership said the ‌central bank may need to raise the cash reserve ratio by 100 basis points and sell 2 trillion rupees of short-dated ​bonds through ​open-market operations.Separately, a renewed ⁠oil-price surge capped the rally.Brent crude climbed above $97 a barrel due to the escalating U.S.-Iran conflict, stoking concerns over India's inflation outlook and fiscal position.RATESOvernight indexed ​swap rates fell, aided by abundant liquidity and softer U.S. Treasury yields.The U.S. 10-year yield eased from a three-year high of 4.81% to 4.7720%.The one-, two- and five-year OIS rates ended 1.5-4.5 bps lower at 5.9950%, 6.19% and 6.4875%, respectively.