Indian Bonds Decline as Yields Near 15-Month Low Deter InvestorsKartik Goyal
India’s 10-year government bonds fell the most in more than three months on speculation yields near a 15-month low deterred buyers.
Some investors probably pared holdings, according to DCB Bank Ltd., after the benchmark 10-year yield dropped 35 basis points this quarter to 8.16 percent yesterday, the lowest since August 2013. Consumer prices rose 5.52 percent in October, the slowest since the index was created in January 2012, according to data published after trading hours yesterday.
“Today’s yield reaction reflects some profit booking after investors took positions ahead of yesterday’s inflation data,” said Debendra Kumar Dash, a trader at DCB Bank in Mumbai. “All the economic indicators are shaping up well.”
The yield on 8.4 percent sovereign debt due July 2024 rose six basis points to close at 8.22 percent in Mumbai, according to prices from the central bank’s trading system. That’s the biggest increase since Aug. 5.
In the currency market, the rupee weakened amid speculation increasing gold imports will boost demand for foreign exchange. India purchased about 150 tons of bullion abroad in October, compared with 24.5 tons a year earlier, people with direct knowledge of the matter said, asking not to be identified as the information isn’t public.
The rupee slipped 0.1 percent to 61.5650 per dollar, prices from local banks compiled by Bloomberg show.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, climbed six basis points to 8.06 percent, data compiled by Bloomberg show.