Gilt prices dropped 60-70 paise across the board on heavy sales today in reaction to Reserve Bank of India (RBI) Governor Bimal Jalan's observations on a flat yield curve. The market interpreted the statement as a hint of an impending correction at the longer end.
The yield on the 1-year 9.81 per cent 2013 bond moved up to close at 5.58 per cent from yesterday's 5.54 per cent and around 5.52 in early morning trades. Most of the impact was felt in the medium- and long-term papers.