India Bond Yields Rise Ahead Of Tomorrow's Debt Supply

Thursday,   29-Jul-2021   01:33 PM (IST)

Indian federal government bond yields edged higher in the afternoon session, as traders awaited a weekly debt sale tomorrow. The benchmark 6.10% bond maturing in 2031 changed hands at 99.28 rupees, yielding 6.20%, at 1:00 pm in Mumbai, against 99.35 rupees, yielding 6.19%, yesterday. Other bond yields were up two-to-three basis points. The Indian rupee was at 74.26 to the dollar against 74.38 yesterday. The federal government will sell bonds worth 320 billion rupees tomorrow, including the liquid 5.63% 2026 and 6.64% 2035 notes. The central bank, which is ensuring New Delhi’s elevated full-year borrowing sails through, has bought comparatively illiquid notes in its previous two debt purchases. India’s sovereign borrowing is not likely to crowd out private borrowing as a growing economy expands the pool of savings, Krishnamurthy Subramanian, the federal finance ministry’s chief economic adviser said today. Subramanian yesterday said that India will meet its budget deficit target for this financial year despite additional spending to provide relief and stimulus as its revenue situation has improved and the economy is recovering. India is aiming at a fiscal deficit of 6.8% this financial year, narrower than last year’s 9.3% budget gap. India’s Monetary Policy Committee has said it will remain accommodative as long as needed to support the pandemic-hit economy, while ensuring inflation remains within target. The next policy decision is due on Aug. 6. The U.S. Federal Reserve kept its interest rate unchanged overnight and remained upbeat about an economic recovery. However, Chairman Jerome Powell said the U.S. job market still had "some ground to cover" before it would be time to pull back its support. Policymakers discussed reducing asset purchases but did not provide any timeline. The 10-year Treasury yield was at 1.244%. Meanwhile, the benchmark Brent crude oil contract was trading 0.69% higher at $74.38 per barrel as stockpiles in the U.S., the world’s largest consumer, fell to their lowest level since January 2020. India imports nearly 85% of its crude oil requirements.