An Indian rupee note is visible in this illustrative photo on June 1, 2017. REUTERS / Thomas White / Illustration

India’s benchmark 10-year bond yield recorded its fifth consecutive weekly decline, while the rupee rose sharply at the end of the market to reach its highest level since late March on dollar sales by foreign banks and the rise in national stocks.

Sentiment for bonds was supported by the purchase of Rs 350 billion ($ 4.80 billion) bonds from the Reserve Bank of India on Thursday, as yields fell. from the US Treasury also helped.

India’s benchmark 10-year bond yield closed up 1 basis point on the day at 5.98%, but ended down 1 basis point on the week.

The partially convertible rupee ended at the day’s high of 72.83 per dollar, its strongest since March 30 and up 0.4% from its previous close of 73.10. On the week, the unit rose 0.6%, posting its fourth consecutive week of gains.

“In India, the trend of improving moderation in new daily Covid cases reinforces the sense of risk,” said Rahul Gupta, head of currency research at Emkay Global Financial Services.

“Currency traders will follow the situation of Covid and the trend of the dollar, and will keep the spot rupee between 72.50 and 73.50 with a negative bias,” he added.

India reported 259,551 new coronavirus infections in the past 24 hours on Friday, while deaths increased by 4,209.


India raised Rs 378.10 billion higher than expected on a debt selloff on the back of bullish sentiment, but some reduction in position was seen after the results.

Bond yields have fallen in each of the past five weeks and eight of the past ten, as the RBI has actively intervened in the market, made open market purchases and called off auctions to ensure yields remain. capped.

Lower yields are essential to ensure that the government’s cost of borrowing is reduced, as it plans to borrow 12.06 trillion rupees in 2021/22.

The RBI wants to cap the yield on 10-year benchmark bonds at 6%, local media outlet Informist reported earlier today, citing an anonymous senior banking official.

“Half the stock (of the 10 year bonds) is with the RBI and they made the market understand that they would buy below 6% on this paper by canceling the auctions when people bid above the 6 levels. .05%, “said Murthy Nagarajan, head of fixed income at Tata Asset Management.

“The RBI will be able to control returns at least for this fiscal year. The 10-year is expected to be between 5.90% and 6.10%.”

The RBI’s aggressive intervention to buy the dollar to prevent sudden rupee gains has also helped the rupee’s liquidity in the market, but traders expect the central bank to try to hold the local currency. stable between 72.50 and 75 levels.

Asian currencies rose on Friday, but a recent poll showed bearish bets were increasing on several Asian units, as rising COVID-19 cases resulted in lockdowns in several countries. Read more

Investors, however, have become bullish on the Indian rupee for the first time in more than two months.

($ 1 = 72.9510 Indian rupees)

Our Standards: Thomson Reuters Trust Principles.

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