In its Macroeconomic and monetary development: third quarter review 2009-10, RBI said the average 6-currency trade-based REER (base: 1993-94=100) appreciated by 9.7% from April to November 2009, on appreciation of the rupee against the dollar and increase in inflation differential between India and its trading partners.
In terms of the broader measure, the 36-currency trade-based REER appreciated by 5.6% during the period. The 6-currency REER stood at 109.3 on January 21, 2010.
Over 98% of the net market borrowing programme of the central government has been completed so far, RBI stated. For the current fiscal, up to January 22, 2010, the Centre had completed a large part of 95.5% of the budgeted borrowing programme via issuance of dated securities (including amount raised through de-sequestering of MSS balances).
In view of increase in governments borrowing requirements and expected pick-up in credit during the second half, the market borrowing programme was front loaded, the report said.
The cut-off yields were lower during 2009-10 (April 2009-January 22, 2010), reflecting ample market liquidity. Intra-year, there has been a steady increase in the cutoff yields, reflecting the continued large supply of government securities. After a gap of five years, the RBI issued floating rate bonds in December 2009 for a notified amount of Rs 2,000 crore.
The gross sanction from the government for market borrowings for 27 states during 2009-10 (up to January 21, 2010) stood at Rs 1,28,116 crore.
The yields moved in a broad range with a hardening bias on concerns of large fiscal deficit and inflationary pressures. The benchmark 10-year yield on government securities hardened during the third quarter, marked by increased turnover in the government securities market due to the large supply of government bonds.