Re gains 14 p at 46.50, bonds rise
GDP grew 7.9% from a year earlier in the July-September period, marking the fastest growth since the January-March quarter of 2008. The rupee ended at 46.50 against dollar, stronger than its close of 46.64 on Friday.
By ET Bureau |
MUMBAI: Buoyant GDP growth data has increased the odds that the central bank will hike interest rates in January to head off inflationary pressures. These expectations resulted in a fall in the prices of government bonds on Monday. GDP grew 7.9% from a year earlier in the July-September period, marking the fastest growth since the January-March quarter of 2008.
“If credit growth starts accelerating in the next one to two months, we could see an earlier normalisation of the easy monetary stance,” said Rahul Bajoria, and Matthew Huang, analayts at Barclays Capital Research.
“We continue to expect the RBI to withdraw liquidity from the system through CRR hikes, before hiking the repo rate. Despite the strong GDP print, we believe the RBI is more likely to hike the repo rate only in Q1FY10 or later — not earlier,” they said in a report to clients.
The yield on the 10-year benchmark bond ended at 7.26%, above Friday’s closing of 7.19%, bonds worth Rs 15,800 crore were traded on Monday. The rupee rose on Monday after the strongest economic growth data in 18 months reinforced expectations of recovery and as stocks rallied on easing concerns about Dubai’s debt problems. The rupee ended at 46.50 against the dollar, stronger than its close of 46.64 on Friday.
The dollar fell on Monday after the United Arab Emirates (UAE) said it would help banks in Dubai. The dollar index was down 0.2% by late evening. Dealers said confidence is emerging among traders that Dubai’s problems may get resolved soon with some banks even covering their long-rupee positions. The UAE provided banks with a liquidity window on Sunday, the first measure to ease worries that debt defaults by two of Dubai’s flagship government-owned firms could hit global recovery.
“If credit growth starts accelerating in the next one to two months, we could see an earlier normalisation of the easy monetary stance,” said Rahul Bajoria, and Matthew Huang, analayts at Barclays Capital Research.
“We continue to expect the RBI to withdraw liquidity from the system through CRR hikes, before hiking the repo rate. Despite the strong GDP print, we believe the RBI is more likely to hike the repo rate only in Q1FY10 or later — not earlier,” they said in a report to clients.
The yield on the 10-year benchmark bond ended at 7.26%, above Friday’s closing of 7.19%, bonds worth Rs 15,800 crore were traded on Monday. The rupee rose on Monday after the strongest economic growth data in 18 months reinforced expectations of recovery and as stocks rallied on easing concerns about Dubai’s debt problems. The rupee ended at 46.50 against the dollar, stronger than its close of 46.64 on Friday.
The dollar fell on Monday after the United Arab Emirates (UAE) said it would help banks in Dubai. The dollar index was down 0.2% by late evening. Dealers said confidence is emerging among traders that Dubai’s problems may get resolved soon with some banks even covering their long-rupee positions. The UAE provided banks with a liquidity window on Sunday, the first measure to ease worries that debt defaults by two of Dubai’s flagship government-owned firms could hit global recovery.
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