Indian bond yields dip on hopes of easy cash

Indian bond yields dip on hopes of easy cash

Mumbai: Indian federal bond yields edged down on Monday, 19 November, after heavy injection of funds by the central bank last week was seen as helping cash conditions.

The RBI injected Rs861 billion (Rs86,100 crore, $21.9 billion) into the banking system via its repo auction last week following a 50 basis point increase in cash reserve ratio on Nov. 10.

At 9:40am (0410 GMT), the 10-year federal bond yield was at 7.87%, a tad lower from the last close of 7.88%.

“The market sentiment is positive on expectation of better liquidity," a dealer with a foreign bank said.

Dealers said lower than expected sales of treasury bills also bolstered sentiment.

The central bank will sell 40 billion rupees of treasury bills and 70 billion rupees of federal bonds this week.

Traders said suspected intervention by the central bank to slow down the rupee’s gains could also improve cash supplies.

The rupee has increased more than 12% this year, as the rapidly growing economy attracted large fund flows into the stock market.

The central bank bought a record $11.87 billion in intervention in September, taking the total in the first months of 2007 to $51.8 billion.