Bonds trade strong
Government bond prices are now back to levels they ended last Friday, after the Reserve Bank of India (RBI) raised Rs 12,000 crore
through the sale of government bonds at yields much higher than what the market expected.
The central bank bought back bonds from traders at yields higher than what the market expected. This buyback was an unscheduled one, prompting many traders to speculate that these operations will now become a weekly affair (as against fortnightly currently).
The yield on the 6.90% paper maturing in 2019 ended at 7.34%, four basis points higher than its last day close.
RBI said it had set a cut-off price, corresponding to an yield of 7.44% for the 7.02% bond maturing in 2016, with the market expecting around 7.33%.
Primary dealers had to buy Rs 430 crore of the unsold 2016 bonds. The cut-off for the 7.94% bonds maturing in 2021 also touched 8% against dealers’ estimate of around 7.90%.
On Thursday, the central bank said it had bought back bonds worth close to Rs 2,700 crore through an auction under its open market operation against its announced target of Rs 6,000 crore.
The rupee ended stronger at 48.66 against the dollar, as upswing in stocks kept the month-end demand for the US currency in check.
It closed at 48.91 against the dollar on Thursday. The dollar fell by late evening, as the consumer spending in the US rose in July, with households taking advantage of the government’s stimulus programme to buy new cars.
News beuro,
- Last Modified: August 31, 2009
- Filed Under: Latest News, MARKETS, NATION, WORLD
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