Mumbai: Indian bonds gained after the central bank scrapped a weekly debt sale amid rising yields with a central bank rate decision due on Thursday.
The yield on the benchmark 10-year bond fell 7 basis points to 6.80%. That remains nearly 40 basis points higher this year as record borrowing for the next fiscal year coincided with a global rout in bonds.
“Higher cash balances has led to cancellation of the upcoming auction this week,” said Madhavi Arora, lead economist at Emkay Global Financial Services Ltd. “This has soothed the local bond market even as global yields continue to rise.”
The reprieve may be short-lived as traders are worried about the unprecedented bond sales of about 15 trillion rupees for the fiscal year starting April amid dwindling demand. Traders are also looking to the Reserve Bank of India’s policy review on Thursday for clues on how it will support the massive bond-sale plan.
The RBI, which manages the government’s borrowing program, canceled a 240 billion rupee bond sale for this week, citing the government’s cash position, the Reserve Bank of India said in a release late Monday.- Bloomberg
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