India?s 10-year bonds declined on speculation increasing government debt sales will damp demand for existing securities.
Yields on the 6.9 % note due July 2019 rose by four basis points to 6.83 % .The price declined by 0.3, or 30 paise per 100 rupee face amount, to 100.50. A basis point is 0.01 percentage point. The spread between one-year and 10-year bond yields in India has widened more than tenfold this year to 2.9 %, according to data compiled by Bloomberg, indicating less demand for longer-term securities as the government increases sales.
The difference reached a record 3.01 points on July 7. The 10-year bond yield may move between 6.75 percent and 7.25 percent in the coming weeks, The cost of five-year swaps, or derivative contracts used to guard against rate fluctuations, climbed. The rate, a fixed payment made to receive floating rates, increased to 6.15% from 6.04%on Monday.
India?s rupee rose for the first time in three days on speculation global investors will pour more funds into Asian assets as regional economies recover from the financial crisis.
The rupee advanced 0.2% to 48.96 per dollar as of the 5 pm close in Mumbai, according to data compiled by Bloomberg. On Monday, it touched 49.445, the weakest level since May 17. The currency is Asia?s worst performer this month with a 2.2% loss. Offshore forwards contracts indicate traders predict the rupee will decline to 49.09 in a month, compared with expectations for a rate of 49.22 on Monday.