India s 10-year Bond Yield Poised For 5th Weekly Fall; Rupee Gains India s 10-year Bond Yield Poised For 5th Weekly Fall; Rupee Gains Sentiment for bonds was buoyed by the Reserve Bank of India s Rs 35,000 crore worth bond buy on Thursday, while a fall in U.S. Treasury yields also helped.
Updated: May 21, 2021 3:44 pm IST
Bond yields have dropped in each of the last five weeks and in eight out of the last 10
India s benchmark 10-year bond yield posted its fifth straight weekly fall, while the rupee rose sharply in late trade to its highest level since end March on dollar sales by foreign banks and an uptick in domestic shares. Sentiment for bonds was buoyed by the Reserve Bank of India s Rs 35,000 crore worth bond buy on Thursday, while a fall in U.S. Treasury yields also helped. India s benchmark 10-year bond yield closed up one basis point on the day at 5.98 per cent, but ended down one bp on week.
The Reserve Bank of India’s strategy to shift some of its currency intervention to the forwards market is adding to its problems. Its balancing act to keep the rupee stable amid heavy foreign inflows while also keeping excess liquidity in check is flooding the market with more foreign funds, prompting a vicious cycle of interventions. The RBI’s outstanding forwards book grew to $28.3 billion as of November from a negative $4.9 billion in the fiscal year 2019-20, highlighting the extent of its operations. That’s pushed the 12-month implied yields, which typically reflect the interest rate differential between India and US, to the highest in more than four years, fueling further inflows.
The Indian Rupee rose as the Nifty 50 slightly fell after the RBI left benchmark rates unchanged despite recent weakening inflation and a massive fiscal spending plan. Will USD/INR bounce?
Rupee Vs Dollar Today: At the interbank foreign exchange market, the domestic unit opened at 73.16 and registered an intra-day high of 73.10, rising against the dollar for the second day
Rupee Vs Dollar Today: Rupee settled at 74.25 against US dollar
The rupee recovered from early losses and gained by 15 paise against the US dollar on January 12, 2021, Tuesday, and settled at 73.25 (provisional) amid positive domestic equities and weakness in the American currency. At the interbank foreign exchange market, the domestic unit opened weak at 73.42 but recovered its lost ground. Amid the trading session, the rupee registered an intra-day high of 73.24 and a low of 73.44. In opening trade, the local unit depreciated four paise to 73.44 against the greenback tracking muted domestic equities. On January 11, 2021, Monday, the rupee had settled at 73.40 against the American currency.