Bond yields rise on jitters ahead of policy review

The market is broadly positioned for a 25 basis point cut in key rates at RBI policy review on Tuesday with RBI’s guidance being key in setting medium term direction.

The benchmark 10-year bond yields closed up 2 basis points at 7.88% after moving in a range of 7.85% to 7.88% in the day.

Total volumes on RBI’s electronic trading platform were at R22,670 crore, sharply lower than an average of R35,000 crore. Market will remain shut for a local holiday on Friday. Bond markets have also been supported by recent reform measures announced by the government such as diesel price deregulation and an increase in duty on gold imports. Limited bond supply in the quarter ending March is also lending some support to bonds, traders said.

Bond yields are expected to trade in the 7.8 to 7.9% range until RBI policy review. Markets showed little reaction after RBI relaxed some of the rules for FIIs buying into domestic debt as part of the government’s long-expected $10 billion increase in corporate and government debt limits.

Re recoups losses, ends at 53.68 on FII debt limit hike

Mumbai : Rupee recovered its early losses and ended almost unchanged at 53.68 against US dollar on Thursday after RBI hiked FII investment limit in certain debt instruments by $5 billion each and removed lock-in period for overseas investors buying G-Secs for the first time.