India Bond Yields Edge Lower As Traders Await RBI GSAP Result

Thursday,   23-Sep-2021   01:38 PM (IST)

Indian government bonds yields fell marginally in the afternoon session as traders awaited the outcome of the central bank’s note purchase. The benchmark 6.10% bond maturing in 2031 changed hands at 99.77 rupees, yielding 6.13%, at 1:00 p.m. in Mumbai against 99.71 rupees and 6.14% yesterday. The Indian rupee was at 73.74 to the dollar against 73.87 yesterday.    The Reserve Bank of India will buy up to 150 billion rupees of federal government bonds today under the so-called government securities acquisition programme, including the benchmark. The central bank will simultaneously sell 2022 maturity papers worth a similar amount. The RBI has bought 1.90 trillion rupees of bonds so far in this fiscal year that started Apr. 1 and is scheduled to buy an additional 150 billion rupees of notes before the end of this month. New Delhi aims to borrow 12.06 trillion rupees via bonds in this fiscal year and is due to sell notes worth 310 billion rupees at the last auction of the fiscal first half tomorrow. The federal government is likely to discuss and detail its market borrowing schedule for the second half of this financial year on Sep. 27, a finance ministry official said. "As of now, we are due to announce the plan on Monday," the official, who did not wish to be named, said. India's rate-setting panel has looked through above-target inflation and infused liquidity in the banking system to help the economy weather the impact of the Covid-19 crisis. However, the RBI has recently been conducting frequent reverse repos to withdraw the excess banking system liquidity. The benchmark Brent crude contract rose to its highest level in over two months, amid rising fuel demand and declining crude stocks. The contract was 0.2% higher at $76.30 per barrel, extending yesterday’s 2.5% jump. Consistently higher crude oil prices pose inflation risks for India as the country imports nearly 85% of its crude oil requirements.