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Bond yields edge lower on speculation of FII debt limit tweak

21 Jul 2014 Evaluate

Bond yields were trading lower since early deals amidst speculation the country could announce a tweaking of foreign institutional investment limits for debt to attract more overseas funds. As per some latest report, Finance Ministry has received RBI’s proposal to raise FII debt limit in government bonds by $5 billion and the ministry’s final decision on the same is expected with a day or two. The Reserve Bank of India, has reportedly proposed for raising FII limit by $5 billion within $30 billion overall-cap. Meanwhile, traders also await the details of this week's debt sale due to be announced later in the evening, amid widespread expectations a new 10-year paper will be announced this month.

On the global front, U.S. Treasuries held steady on Friday, taking in stride a weaker-than-expected U.S. consumer sentiment survey and holding onto the safe-haven flows stemming from the escalation of tensions in Ukraine and Israel in the last 24 hours. Meanwhile, brent crude held steady above $107 a barrel on Monday with investors closely watching an intensifying geopolitical crisis between Moscow and the West over the downing of a civilian jet in Ukraine last week.

Back home, the yields on new 10 year Government Stock 2023 was trading 2 basis points lower at 8.75% from its previous close of 8.77% on Friday.

The benchmark five-year interest rate swaps were trading 1 basis point lower at 7.88% from its previous close of 7.89% on Friday.

The Reserve Bank of India has announced the auction of 91 and 364 days Government of India Treasury Bills for notified amount of Rs 9,000 crore and Rs 6000 crore respectively. The auction will be conducted on July 23, 2014 using 'Multiple Price Auction' method.

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