India Bond Yields Stay Lower On RBI Debt Purchase Plan

Wednesday,   07-Apr-2021   01:21 PM (IST)

Indian federal government bond yields were lower in the afternoon session after the central bank said it would purchase securities worth one trillion rupees in April-June, while keeping its key rate and policy stance unchanged. The benchmark 5.85% bond maturing in 2030 changed hands at 98.23 rupees, yielding 6.09%, at 1:00 p.m. in Mumbai, against 98.03 rupees and 6.12% yesterday. Earlier today, the yield fell to 6.05%, the lowest since Feb.18. The Indian rupee was at 74.33 to the dollar, against 73.43 yesterday. The RBI today announced a bond purchase plan for this fiscal year starting Apr. 1 to support new Delhi’s elevated borrowing. The operations will kick off with a 250-billion-rupee purchase on Apr. 15. India aims to borrow 12.05 trillion rupees via bonds in the local debt market this fiscal, of which 60% will be sold in the first half of the year. Last fiscal year, the RBI bought a net 3.13 trillion rupees of government bonds to aid a record 13.7-trillion-rupee supply by New Delhi. The Monetary Policy Committee today unanimously held the repurchase rate at a record low of 4% for the fifth consecutive time amid a resurgence in coronavirus infections. The MPC will remain accommodative “till prospects of sustained recovery are well secured,” RBI Governor Shaktikanta Das said. However, lockdowns could delay the return to normalcy, he added. The panel had cut the repurchase rate by 115 basis points from late March through May last year but had kept it unchanged since then due to elevated inflation. India's retail inflation is now projected at 5.2% in April-June and in July-September, 4.4% in October-December and 5.1% in January-March, with risks broadly balanced. Meanwhile, the benchmark Brent crude oil contract was trading 0.4% higher at $63.05 per barrel on increased optimism about the economic recovery and as U.S. crude inventories fell, according to a report. India imports nearly 85% of its crude oil requirements.