India’s 10-Year Bonds Advance on Monetary Easing Speculation

India’s 10-year bonds gained for the first time in three days on speculation the central bank will ease the monetary policy further to counter slowing growth.

The Reserve Bank of India cut the cash reserve ratio on Sept. 17 by 25 basis points to 4.50 percent, the lowest level in eight years. Asia’s third-largest economy grew 5.5 percent in the three months ended June, government data show. Growth was 5.3 percent in the previous quarter, the least since 2009.

“Bonds are gaining on expectations of policy support to boost growth,” said Anoop Verma, a fixed-income trader at Development Credit Bank Ltd. (DEVB) in Mumbai.

The yield on the 8.15 percent notes due June 2022 fell one basis point, or 0.01 percentage point, to 8.16 percent in Mumbai, according to the central bank’s trading system.

The RBI refrained from cutting the repurchase rate for a third meeting this month after reducing it by 50 basis points to 8 percent in April. The next policy review is due Oct. 30.

The government will borrow 2 trillion rupees ($38 billion) selling debt in the six months beginning October, as budgeted by the government, Economic Affairs Secretary Arvind Mayaram said today.

One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, fell two basis points to 7.64 percent, according to data compiled by Bloomberg.

To contact the reporter on this story: V. Ramakrishnan in Mumbai at rvenkatarama@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net