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Bond yields fall sharply tailing gains of Rupee

18 Dec 2014 Evaluate

Bond yields dropped sharply on Thursday tailing gains of Indian currency after the U.S. Federal Reserve said it would take a 'patient' approach in deciding when to raise interest rates, quelling fears of outflows from emerging markets’ asset.

On the global front, U.S. Treasuries yields rose on Wednesday after the U.S. Federal Reserve tweaked its message on interest rates, saying that while it was in no hurry to raise them, it will monitor data on growth and inflation to decide on the timing of such a move. Meanwhile, brent crude held steady above $61 a barrel on Thursday, bringing a sharp drop in prices to a temporary halt as companies are forced to cut upstream investments around the world.

Back home, the yields on new 10 year Government Stock 2023 were trading 6 basis points lower at 7.91% from its previous close of 7.97% on Wednesday.

The benchmark five-year interest rate swaps were trading 7 basis points lower at 7.27% from its previous close of 7.36% on Wednesday.

The Government of India have announced the sale (re-issue) of the Government Stock through auctions to be held on December 19, 2014, including (i) 8.27 per cent GS 2020 for a notified amount of Rs 3000 crore, (ii) 8.40 per cent GS 2024 for a notified amount of Rs 6000 crore, (iii) 8.24 per cent GS 2033 for a notified amount of Rs 2000 crore and lastly (iv) 8.17 per cent GS 2044 for a notified amount of Rs 3000 crore.

The Reserve Bank of India will conduct overnight repo variable rate auction for a notified amount of Rs 35,000 crore today (December 18, 2014, Thursday). The auction will be conducted between 4.00 pm and 4.30 pm as per the revised guidelines on Term Repo Auctions issued on February 13, 2014.

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