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India Bond Yields Stay Down; RBI Bond Purchase Details Awaited

Thursday,   10-Jun-2021   01:27 PM (IST)

India's federal government bond yields stayed lower in the afternoon session tracking U.S. Treasuries, even as traders awaited the choice of notes the central bank will buy next week. 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 98.81 rupees and 6.02%, yesterday. The Indian rupee was at 73.04 to the dollar against 72.98 yesterday. The 10-year U.S. Treasury yield fell to 1.4720% yesterday, its lowest in one month, suggesting that the bond market is not overly worried about today’s U.S. inflation data. Economists expect a 0.4% month-on-month increase in the headline U.S. consumer price index and a 0.5% jump in the core measure for May, which would push the inflation rate well above the Federal Reserve’s medium-term target. The Reserve Bank of India is scheduled to buy bonds worth up to 400 billion rupees on Jun. 17 under its government securities acquisition programme. This auction includes 100 billion rupees of state debt. India’s central bank is doing most of the heavy-lifting to support the pandemic-hit economy, while ensuring the federal government’s elevated borrowing of 12.06 trillion rupees for this fiscal year sails through. New Delhi will also borrow an additional 1.58 trillion rupees on behalf of states. The federal government may have to borrow an additional 650 billion rupees this fiscal year following its decision to inoculate all adults free of cost, Emkay Global said. India’s free Covid-19 vaccination for all adults will cost it up to 500 billion rupees, a senior finance ministry official had told NewsRise yesterday. India has reported fewer than 100,000 fresh daily cases over the last three days but the daily rise in fatalities hit a record high at 6,148 after the eastern state of Bihar revised its numbers. Meanwhile, the benchmark Brent crude oil contract was trading 0.61% lower at $71.78 per barrel. India imports nearly 85% of its crude oil requirements.