India Bond Yields Steady Ahead Of March Inflation Data

Monday,   12-Apr-2021   02:08 PM (IST)

Indian federal government bond yields were largely unchanged in the afternoon session, as traders awaited inflation data for March, due after market hours today, even as a spike in Covid-19 cases hurt the local currency. The benchmark 5.85% bond maturing in 2030 changed hands at 98.84 rupees, yielding 6.01%, at 1:00 p.m. in Mumbai, against 98.78 rupees and 6.02% on Friday. The Indian rupee fell to 74.91 to the dollar against 74.74 in the previous session. Indian money markets will be closed tomorrow and on Wednesday for local holidays. India's retail inflation rate is expected to have accelerated to 5.40% in March, against 5.03% in February, on higher food and oil prices, according to a Reuters poll. The Reserve Bank of India targets inflation at 4% - with tolerance levels stretching to two percentage points on either side. Barclay expects consumer price inflation to remain volatile over the next few months as the lockdown effects from 2020 leave an imprint on headline figures. “Core CPI should remain elevated, at 6.0% in March, the highest in more than 32 months. However, March could likely mark local maxima for core CPI, which our trajectory shows moderating from thereon,” Chief India Economist Rahul Bajoria said. The country, Asia’s third-largest economy, is in the midst of a fresh wave of coronavirus cases and limited lockdowns are in place in many states, threatening the nascent economic recovery. India reported a record single-day spike of 168,912 new infections in the last 24 hours. The central bank will purchase federal government bonds, including the benchmark note, worth 250 billion rupees on Apr. 15. This will be the first purchase by the RBI under its so-called government securities acquisition programme. The benchmark Brent crude oil contract was trading 0.6% down at $62.55 per barrel. India imports nearly 85% of its crude oil requirements.