The yield on Indian benchmark 10-year bonds ended at 7.62%, up from the previous close of 7.58%. The yields have touched 7.57% on Tuesday. The domestic papers closely followed the US Treasury and ended lower as generally there is a direct correlation between the two said a dealer from private sector bank. There was selling in the government securities market ahead of the October auctions, he further said.
Among the other highly trade papers the yield on 8.07% government paper maturing in 2017 ended higher at 7.68% from its previous close of 7.63% while the 9.39% paper maturing in 2011 ended at 7.39% up from its previous close of 7.35%.
Call rates in the inter bank money market ended range-bound at 6.40-6.50%. The RBI absorbed Rs 5,210 crore through its first reverse repo auction and another Rs 12,195 crore through its second reverse repo auction on Thursday.
The rupee ended steady on Thursday as traders waited for fresh economic data to determine the dollars near term trend. The rupee closed at 45.92/93 after a subdued session, unchanged from the previous close. It has been a very quiet session and dollar/rupee has been trading in a tight band. The rupees movements in the near term will be data dependent and 45.80 will be the next resistance, said a trader at a foreign bank.
Upcoming US data, including a final reading for second-quarter growth on Thursday and a key inflation report on Friday, could provide some indication of the U.S. Federal Reserves likely policy stance, dealers said.
A series of rate increases by the Fed has cut the rate differential between India and the US to 75 basis points from 350 basis points in June 2004. The Fed kept rates intact at its last meeting on August 8. Rising global rates have dampened investor demand for debt from emerging market economies such as India, and the RBI has had to raise rates to attract inflows. In the forward market, the six month forward premia went down to 1.26% from its previous close of 1.27% while the twelve month forward premia remained unchanged at 1.32%.