Indian Bonds Gain With Rupee as Modi Takes Steps to Open Economy

Updated on
  • Fed minutes outlining gradual pace of rate rises lend support
  • Strike by central bank workers didn't affect market: RBL Bank

Indian bonds rose for the first time in four days and the rupee strengthened after authorities took steps to open the economy and the Federal Reserve said the pace of interest-rate increases would be moderate.

Prime Minister Narendra Modi’s government announced on Wednesday the sale of a stake in Coal India Ltd., part of a federal asset-sale program, following last week’s decision to relax foreign investment rules in 15 industries. The Fed indicated it would most likely raise borrowing costs in December but the trajectory of future increases would be gradual, according to minutes of its October meeting released Wednesday.

“The Coal India disinvestment after the FDI easing is positive for the markets,” said Sagar Shah, vice president of treasury at RBL Bank Ltd. in Mumbai. The Fed minutes are comforting the market and aiding riskier assets, he said.

The yield on the sovereign bonds due May 2025 fell one basis point to 7.67 percent in Mumbai, according to prices from the central bank’s trading system. The rupee rose 0.2 percent, the most since Nov. 13 , to 66.1850 a dollar in Mumbai, according to prices from local banks compiled by Bloomberg. The benchmark stock index climbed 1.4 percent.

Around 17,000 employees of the Reserve Bank of India stayed away from work Thursday, the first strike in more than six years, protesting against institutional reform and demanding better pensions. The action didn’t impact the markets, RBL Bank’s Shah said.

The mass casual leave caused “some interruptions to clearing and settlement operations of the Reserve Bank during opening hours of the day,” the RBI said in a statement. “However, the management engaged with representatives of the United Forum and persuaded them in largely restoring normalcy.”

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