Bonds declined, pushing yields to the highest level in 11-weeks, on speculation the central bank will boost borrowing costs tomorrow for the ninth time since March 2010.
“A 25-basis points increase in overnight rate is a certainty,” said Krishnamurthy Harihar, treasurer at FirstRand Bank Ltd in Mumbai. “Inflation, stemming from high commodity prices, has to be tackled.” The yield on the 7.80 percent note due April 2021, the most-traded government security, rose one basis point to 8.14 percent at the 5 p.m. close in Mumbai, according to the central bank’s trading system.
RUPEE FALLS
The rupee fell, snapping a three- day rally, after overseas investors pared holdings of local equities on concern rising borrowing costs are pushing up costs and eroding earnings at the nation’s companies.
CALL RATES EDGE UP
Call rates edged up to end at 6.90 per cent at the overnight call money market due to mild demand from borrowing banks. The overnight call money rate finished slightly higher at 6.90 per cent from last Friday’s closing level of 6.85 per cent. It moved in a wide range of 6.90 per cent and 6.25 per cent.
