The sharp slide in the value of the rupee wrecked havoc in bond markets where gilt prices fell sharply anticipating a selloff by foreign institutional investors. Ironically, this happened on a day the Reserve Bank of India auctioned bond quotas to foreign institutional investors.
The fall in bond prices was so sharp that it triggered off circuit filters forcing a halt in trading. However, trading was restored after the Fixed Income and Money Market Dealers Association (Fimmda) sought RBI's permission to resume trade. The sharp fall in bond prices compelled NTPC to shelve its Rs 1,000 crore bond issue as yields rose much higher than anticipated.
The fall in bond prices would be a big negative for bank earnings. Banks which have been under pressure from non-performing assets and higher provisioning requirements had hoped to fall back on trading profits and write-back of excess depreciation provided on government bonds. However, the recent fall in prices has wiped out all gains, raising the prospect of making additional provisions for depreciation.
The fall in bond prices was so sharp that it triggered off circuit filters forcing a halt in trading. However, trading was restored after the Fixed Income and Money Market Dealers Association (Fimmda) sought RBI's permission to resume trade. The sharp fall in bond prices compelled NTPC to shelve its Rs 1,000 crore bond issue as yields rose much higher than anticipated.
The fall in bond prices would be a big negative for bank earnings. Banks which have been under pressure from non-performing assets and higher provisioning requirements had hoped to fall back on trading profits and write-back of excess depreciation provided on government bonds. However, the recent fall in prices has wiped out all gains, raising the prospect of making additional provisions for depreciation.
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