India’s 10-year bonds dropped, pushing yields to their highest level in more than two weeks, on concern that the biggest government debt sale this year would reduce appetite for existing notes.
The finance ministry will sell $3.4 billion of notes due in 2018, 2021, 2027 and 2040 tomorrow, a part of its Rs 4.17 lakh crore borrowing target for the financial year ending in March. Last week, the government cut duties on crude and taxes on oil products to soften the blow on consumers. The yield on the 7.8 per cent bond due April 2021 rose one basis point, or 0.01 percentage point, to 8.33 per cent at close in Mumbai, the highest level since June 15, according to the central bank’s trading system.
RUPEE GAINS
The rupee firmed up further by 13 paise to 44.73 against the American currency in early trade today on persistent selling of dollars by banks and exporters in view of sustained capital inflows from foreign funds into the equity market amid dollar weakness abroad. The rupee resumed higher at 44.76/77 per dollar at the Interbank Foreign Exchange as against yesterday’s close of 44.86/87 per dollar and moved up further to 44.73 per dollar before quoting at Rs 44.75/76 per dollar at 10.30 am.
CALL RATE DROPS
The call rate dropped on the overnight call money market today on surfeit of liquidity amid lack of demand from borrowing banks. The overnight call money rate settled at the day’s low level of 3.50 per cent from 7.60 per cent yesterday.