Market Eye – Week Ahead: Bond/FX investors hope for another OMO

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Summary* The Indian government will wrap up its 5.7 trillion rupee borrowing programme for the current fiscal year with a debt sale of 120 billion rupees ($2.23 billion) next week.

* The Indian government will wrap up its 5.7 trillion rupee borrowing programme for the current fiscal year with a debt sale of 120 billion rupees ($2.23 billion) next week. * Dealers expect RBI to buy bonds via another open market operation next week to coincide with the auction, given the tightness of cash conditions in the banking system.

* Indian market regulator to auction foreign fund debt limits worth $11.3 billion on Feb. 20, marking the first sale since the government raised debt limits in government and corporate bonds by $5 billion each.

* Foreign institutional investors with licences can participate in these monthly auctions for corporate and government bonds, purchasing quotas which provide them with the right to invest in debt up to the limit bought.

* Investors also shifting focus to the 2013/14 budget to be unveiled on Feb. 28, with the budget session of parliament due to begin on Feb. 21.

* Global risk factors also key as G20 leaders meet in Moscow over the weekend. * USD/INR likely to trade in 53.50-54.30 band next week.

* India's benchmark 10-year bond yield may break below 7.79 percent next week, the 29-month low it hit recently. KEY FACTORS TO WATCH Mon: British PM David Cameron begins India visit Tues: India bond, FX markets closed for banking holiday Wed: T-bills sale, money supply data FII debt limit auction Thu: Indian parliament's budget session begins. Fri: Forex reserves data ($1 = 53.8950 Indian rupees)

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