​Benchmark bond yields fall two basis points

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The benchmark bond yields on Tuesday fell two basis points or 0.23 per cent to close at Rs 8.75% pushing up prices by 11 paisa (or 0.11%) to Rs 100.51 from Rs 100.40 on Monday. Prices and yields move in opposite direction.

The ten-year yield hit intra-day high at 8.79% immediately after the Reserve Bank of India hiked its policy or repo rate by 25 bps to 8%. Markets were expecting no change in rates.

"Yields rose in a knee-jerk reaction," said Mohan Shenoi, head - treasury at Kotak Mahindra Bank. "But markets drew comfort from the governor's future guidance. After this latest rate hike, the central bank may not raise rates further."

In the mid-quarter policy last December, markets were expecting a rise of 25 bps but the central bank had not changed rates. In the latest quarterly policy the Reserve Bank hinted at no further rate hikes.

"The extent and direction of further policy steps will be data dependent," RBI governor Raghuram Rajan said in the quarterly policy statement. "...though if the disinflationary process evolves according to this baseline projection, further policy tightening in the near term is not anticipated at this juncture."

The partially convertible rupee snapped three-day losing streak against the greenback. It gained 58 paisa or 0.92 per cent to close at 62.52 per US dollar on Tuesday.

"It was the rate hike that added to rupee's rise today," said Jamal Mecklai, CEO, Mecklai Financial. A rate hike is likely to attract more overseas funds as the interest rates remain around zero level in developed economies like US.

"People felt comfortable about it. But I don't think, rupee continues to appreciate strongly but it would not be falling at the same time," he added.

The Economic Times
Thanking you

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Rajesh Kumar Kathpalia ¤ SMC Global
17,Netaji Subhash Marg,Daryaganj,
New Delhi-110002 Mobile No 9891645052
Email Id: rajesh.ipo@smcindiaonline.com


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