Home Business Indian Bond Yields Fall to over One-week Low after Special OMO Announcement

Indian Bond Yields Fall to over One-week Low after Special OMO Announcement

Representative Image (Reuters).

Traders anticipate the benchmark bond yield to stay in a decent 5.83% to five.93% vary within the close to time period within the absence of any contemporary cues.

  • Reuters Mumbai
  • Last Updated: June 30, 2020, 12:57 PM IST

India’s benchmark 10-year bond yield dropped to its lowest degree in over every week on Tuesday after the Reserve Bank of India introduced a particular open market operation to concurrently purchase and promote debt on July 2.

The yield dropped to a low of 5.86%, its lowest degree since June 22 and down four foundation factors versus its shut on Monday.

The RBI mentioned on Monday it would purchase as much as 100 billion rupees ($1.32 billion) value of papers within the 9-13 12 months tenor from the market on July 2, whereas additionally promoting 6- and 12-month treasury payments of the identical worth.

“The market is happy that the RBI is at least watching and stepping in when it feels necessary. In the absence of an open market calendar, this is still some comfort,” the top of mounted earnings buying and selling at a non-public financial institution mentioned.

Traders anticipate the benchmark bond yield to stay in a decent 5.83% to five.93% vary within the close to time period within the absence of any contemporary cues.

Seven Indian states are as a consequence of promote a minimum of 90 billion rupees value of debt later within the day with a greenshoe choice to retain a further 30 billion rupees.

Yields on the public sale are anticipated to fall following the OMO announcement, merchants mentioned.

Foreign buyers purchased a web 14.2 billion rupees value of bonds on June 29, the very best single session shopping for since April 20, reflecting some return in urge for food for home debt however merchants mentioned this might change within the absence RBI help.

“A more decisive roadmap of OMOs will be necessary to materially lower rates,” mentioned Radhika Rao, an economist with DBS Bank.

“We expect domestic agents to be at the drivers’ seat to absorb this year’s supply, led by banks and the RBI, while foreign investors stay by the sidelines”.


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