Bond yields rise

Font Size

Print

Feedback

Email

Discuss

Mumbai Oct 14: Bond yields rose sharply on Tuesday as investors expected a cut in the proportion of deposits banks must invest in bonds. The benchmark 10-year bond yield ended at 7.94%, after rising to 7.97% during the session, 14 basis points above Monday’s close of 7.80%.

“While the central bank will likely cut the SLR in its policy, a reduction before the policy also cannot be ruled out,” a trader with a foreign bank said.

Suresh Tendulkar, chairman of Prime Minister Manmohan Singh’s economic advisory council, had said on Monday that cuts in banks' cash reserve and bond requirements could be used to ease a cash crunch in the money markets. Overnight call money rates ended at 8.75-9%, lower from Monday’s close of 9.75-10%. Cash inflows from the CRR cut have helped overnight rates ease from a 19-month-high of 23% touched last week.

On Tuesday, the central bank injected Rs 3,500 crore at its special 15-day repo auction, at which up to Rs 20,000 crore were available.

Meanwhile, the rupee trimmed gains in late trade on Tuesday after the stock market came off the day’s high and demand for dollars from oil refiners weighed. It ended at 48.04/06 per dollar, off a high of 47.57, but 0.4% stronger than 48.25/27 at the close on Monday.