Mumbai: Indian federal bonds erased early losses on Monday, 29 October, as a few traders built positions on expectations the central bank could spring a surprise by cutting one of the benchmark rates in its policy review on Tuesday.
However, none of the 11 analysts polled by Reuters last week expect the Reserve Bank of India (RBI) to change short-term rates, and only three expected an increase in banks’ reserve requirements.
Oil hit a new record above $93 a barrel on Monday. Traders said higher oil prices could pressure the government to raise state-set fuel prices, which would likely lead to an increase in inflation.
At 11:45am, the yield on the 10-year federal bond was at 7.81%, down from an early high of 7.83% and the previous close of 7.82%.