India's 10-year government bonds gained, pushing the yield down from a two-week high, on speculation a growing cash supply will boost demand.
The overnight interbank borrowing rate has averaged 7.68 percent this month, compared with 8.12 percent in July. That’s less than the Reserve Bank of India’s key repurchase rate of 8 percent. Lenders’ overnight borrowings from the RBI to meet shortages have averaged 98 billion rupees ($1.6 billion) in August, from 128 billion rupees the previous month, official data show.
“Easing liquidity conditions are a source of comfort for the market,” said Debendra Kumar Dash, a fixed-income trader at DCB Bank Ltd. in Mumbai. “The market has confidence that the RBI will make sure that the overnight lending rate is close to the RBI’s repo rate.”
The yield on the 8.4 percent bonds due July 2024 fell one basis point, or 0.01 percentage point, to 8.55 percent, as of 10:34 a.m. in Mumbai according to the central bank’s trading system. The rate climbed four basis points yesterday to the highest level since Aug. 12.
Investors are waiting for another increase in the foreign-investment limit for sovereign notes, said Dash. Overseas funds can currently own a combined $25 billion of the debt and are already at 99.2 percent of that, according to National Securities Depository Ltd. data. The central bank raised the cap by $5 billion on July 23 and RBI Governor Raghuram Rajan said Aug. 6 that there was a possibility of increasing it further.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, were little changed at 8.46 percent.
The overnight interbank borrowing rate has averaged 7.68 percent this month, compared with 8.12 percent in July. That’s less than the Reserve Bank of India’s key repurchase rate of 8 percent. Lenders’ overnight borrowings from the RBI to meet shortages have averaged 98 billion rupees ($1.6 billion) in August, from 128 billion rupees the previous month, official data show.
“Easing liquidity conditions are a source of comfort for the market,” said Debendra Kumar Dash, a fixed-income trader at DCB Bank Ltd. in Mumbai. “The market has confidence that the RBI will make sure that the overnight lending rate is close to the RBI’s repo rate.”
The yield on the 8.4 percent bonds due July 2024 fell one basis point, or 0.01 percentage point, to 8.55 percent, as of 10:34 a.m. in Mumbai according to the central bank’s trading system. The rate climbed four basis points yesterday to the highest level since Aug. 12.
Investors are waiting for another increase in the foreign-investment limit for sovereign notes, said Dash. Overseas funds can currently own a combined $25 billion of the debt and are already at 99.2 percent of that, according to National Securities Depository Ltd. data. The central bank raised the cap by $5 billion on July 23 and RBI Governor Raghuram Rajan said Aug. 6 that there was a possibility of increasing it further.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, were little changed at 8.46 percent.
No comments:
Post a Comment