Indian government bonds rose for the first time in a week on speculation a jump in the 10-year yield to the highest in almost a month yesterday is luring buyers.
The yield on the benchmark 8.15 percent notes due June 2022 fell two basis points, or 0.02 percentage point, to 7.51 percent as of 10:24 a.m. in Mumbai, according to the central bank’s trading system. The rate rose 12 basis points in the first two days of the week, touching 7.53 percent yesterday, the highest level since May 13.
The rupee rebounded from a record low touched yesterday, easing concern a weakening currency will stoke inflation. The wholesale price index probably rose 4.87 percent in May, the least since 2009, according to a Bloomberg survey of economists before the data due June 14.
“There is some value buying at these levels, particularly by state-run banks,” said Srinivasa Raghavan, the Mumbai-based executive vice president of treasury at Dhanalaxmi Bank Ltd. “Inflation is also on a downward trend.”
The rupee has declined 6.6 percent this quarter, the worst performer among Asia’s 11 most-traded currencies. A 10 percent drop would add 60 to 80 basis points to headline wholesale price inflation and widen the current-account deficit by 0.4 percent of gross domestic product, Mumbai-based Nomura Holdings Inc. economists Sonal Varma and Aman Mohunta wrote in a research note.
The one-year interest-rate swap, a derivatives contract used to guard against fluctuations in funding costs, fell one basis point to 7.24 percent, according to data compiled by Bloomberg.
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