India Bond Yields Stay Lower As RBI To Buy Benchmark Next Week

Friday,   09-Apr-2021   01:18 PM (IST)

Indian federal government bond yields stayed lower in the afternoon session as the Reserve Bank of India’s planned purchase of the benchmark note next week kept investors upbeat. The benchmark 5.85% bond maturing in 2030 changed hands at 98.90 rupees, yielding 6.00% at 1:00 p.m. in Mumbai against 98.68 rupees and 6.03% yesterday. Earlier today, the yield fell to 5.96%, the lowest since Feb. 12. The Indian rupee was at 74.75 to the dollar against 74.59 yesterday. The Reserve Bank of India will on Apr. 15 buy the benchmark note, along with papers maturing in 2023, 2025, 2027 and 2035 worth up to 250 billion rupees in its first operation under the so-called Government Securities Acquisition Programme. The G-SAP is an explicit bond-buying programme of the central bank to ensure that heavy local bond issuances do not lead to chaotic moves in yields. The central bank plans to buy one trillion rupees of notes through June-end under this route, and analysts expect this programme to continue in the coming quarters. India is seeing a fresh wave of Covid-19 infections leading to localized lockdowns among other restrictions in many parts of the country. The country reported a record single-day spike of 131,968 coronavirus cases today. Earlier this week, the country’s rate-setting panel held the key repurchase rate unchanged at a record low 4% and said it will stay accommodative till prospects of a sustained recovery in the pandemic-hit economy are well secured. New Delhi is selling bonds worth 320 billion rupees at its first auction for this fiscal today. It aims to borrow 60% of its full-year target of 12.05 trillion rupees in April-September. Crude oil prices rose, supported by a weaker dollar, even as investors weighed rising supplies and the impact on fuel demand due to the Covid-19 pandemic. The benchmark Brent crude oil contract was trading 0.4% lower at $62.95 per barrel. India imports about 85% of its crude oil requirements.