RBI moves curb rupee, yields ascend, call falls

Recap

 Government bond prices at the longer end of the curve ended higher on Monday amid thin trade, as the apex bank indicated a benign outlook for inflation.

 There was widespread scepticism that the global recovery is on the upswing and a softening in the interest rates might be nearing an end.

 During the week, yields on government bonds went up as demand from public sector banks tapered off due to uncertainty towards the long term outlook on the interest rates.

 Traders maintained that buying in the earlier part of the week was caused by easy liquidity, a cut in deposit rates by some leading banks and an assurance by the apex bank governor on a benign inflation outlook.

 But a recent hike in interest rates by two central banks