Bonds under pressure, Re gains 16 paise to 48.80
The yield on the 10-year benchmark bond rose 3 basis points to end at 7.11%. Bond and currency markets will be closed on Wednesday for a holiday on account of the Parsi New Year.
By ET Bureau |
MUMBAI: Government bond prices continued to be under pressure with traders predicting that the Centre would struggle to auction its bonds in the coming days. The yield on the 10-year benchmark bond rose 3 basis points to end at 7.11%. Bond and currency markets will be closed on Wednesday for a holiday on account of the Parsi New Year.
On Monday, the government announced its plans to raise Rs 12,000 crore through the sale of three bonds, including the 10-year benchmark security. It also said it would buy back bonds worth Rs 6,000 crore from traders on Thursday.
���All eyes are now on how much the central bank will buy back from the market on Thursday. If it wants future auctions to succeed it will have to announce purchases at low yields. Only that can improve the sentiment from here,��� said a dealer at a mid-sized public sector bank.
The government raised Rs 12,000 crore through sale of bonds last Friday, but at yields much higher than expected. Primary dealers underwriting the issue had to subscribe to over Rs 900 crore of newly-issued bonds, as the issue was undersubscried at the cut-off price. Meanwhile, the 10-year paper is losing favour with the market again. The 6.90% coupon paper maturing in 2019 already has an outstanding volume of Rs 40,000 crore in the market.
The rupee rose 16 paisa to end at 48.80 against the dollar, as dealers took a break from their risk averseness towards emerging market assets. The dollar index, a gauge of the dollar���s movement against six major currencies, was, however, up 0.2% by late evening. The outlook for emerging market currencies remains good. Data on Monday showed a bigger-than-expected decline in US wholesale prices, making it unlikely that the Fed will raise rates soon.
The only data that disappointed dollar bears was US housing starts, that unexpectedly fell in July, pulled down by multi-family dwellings.
On Monday, the government announced its plans to raise Rs 12,000 crore through the sale of three bonds, including the 10-year benchmark security. It also said it would buy back bonds worth Rs 6,000 crore from traders on Thursday.
���All eyes are now on how much the central bank will buy back from the market on Thursday. If it wants future auctions to succeed it will have to announce purchases at low yields. Only that can improve the sentiment from here,��� said a dealer at a mid-sized public sector bank.
The government raised Rs 12,000 crore through sale of bonds last Friday, but at yields much higher than expected. Primary dealers underwriting the issue had to subscribe to over Rs 900 crore of newly-issued bonds, as the issue was undersubscried at the cut-off price. Meanwhile, the 10-year paper is losing favour with the market again. The 6.90% coupon paper maturing in 2019 already has an outstanding volume of Rs 40,000 crore in the market.
The rupee rose 16 paisa to end at 48.80 against the dollar, as dealers took a break from their risk averseness towards emerging market assets. The dollar index, a gauge of the dollar���s movement against six major currencies, was, however, up 0.2% by late evening. The outlook for emerging market currencies remains good. Data on Monday showed a bigger-than-expected decline in US wholesale prices, making it unlikely that the Fed will raise rates soon.
The only data that disappointed dollar bears was US housing starts, that unexpectedly fell in July, pulled down by multi-family dwellings.
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