Bond yields fall as prices rise.
The ‘Other’ buyer category bought bonds worth more than 40 billion rupees ($455 million) on a net basis on Monday, the most in more than five weeks.
Traders suspect that the Reserve Bank of India has likely intervened to support interest rates.
Additionally, the local currency ended a three-day losing streak thanks to support from the RBI following a rise in the dollar index. It opened 39 paisa higher at 88.39 against the dollar on Tuesday, its best opening since October 15 this year. Optimism around the rupee spilled over into bonds, pushing the 10-year yield below the key 6.52% mark and fueling expectations of further easing. “The market got some positive signals as the rupee appreciated,” said Umesh Tulsyan, managing director at Sovereign Global Markets.“We saw good buying in the first hour of trading and some unwinding of short trading throughout the day.”
The focus will also be on weekly government bond sales later in the day, with cut-off yields signaling appetite in a market short of buyers, traders said.
Indian states will try to raise 136 billion rupees ($1.53 billion) through bond sales later in the day, with the amount down from the 194.50 billion rupees planned for a second week, according to the calendar.
The central bank will also meet with select Primary Dealers later today, with discussions expected to focus on liquidity stress and weak demand.
PRICES
Indian overnight interest rates (OIS) remained flat as traders waited for more directional cues.
The one-year OIS interest rate was 5.4725% and the two-year interest rate was 5.43%. The five-year swap rate was 5.68%. ($1 = 88.7850 Indian Rupees)
#Indian #bonds #rise #central #bank #support #rupee #power