Mumbai: India’s 10-year bonds rose on speculation the central bank will lower interest rates tomorrow for the third time this year to boost economic growth.
The benchmark note maturing in 2019 climbed for a fourth day, its best winning run in three months, as economists predict Reserve Bank of India governor D. Subbarao will reduce the overnight lending rate by half a percentage point to 5%. Rate cuts and higher government spending since October will help revive growth in Asia’s third largest economy, the central bank said on Monday in a report.
“The trend is suggesting investors are pricing in a rate cut and more easy monetary conditions,” said S. Srikumar, chief debt trader at state-owned Corporation Bank.
The yield on the 6.05% note due February 2019 dropped two basis points to 6.39% at close in Mumbai, according to the central bank’s trading system. The price rose 0.13, or 13 paise per Rs100 face amount to 97.56.
Indian bonds lost 4.2% this year, the worst performance among 10 Asian local currency debt indexes compiled by HSBC Holdings Plc.