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Bond yields ease after govt hikes gold import duty

22 Jan 2013 Evaluate

Bond yields eased marginally as hike in gold import tax adding to government revenue, helps tackling current account deficit. However, the fall of the yields remain capped as bonds remain susceptible to profit-taking at upticks on caution ahead of the central bank policy next week.

In a move to control imports of the precious metals, the government has hiked the import duty on gold and platinum to 6% from 4% with immediate effect. This move by the government would help moderate import of gold and help in bridging the current account deficit (CAD).

On the global front, treasuries fell as US benchmark 10-year yields that are less than 2 percent drove demand for junk-rated corporate securities to the most in 19 months, while the Bank of Japan (8301) pledged to boost efforts to spur its economy. Meanwhile, Brent crude edged up near $112 a barrel on Tuesday as Japan was expected to pump in more money to boost its economy, adding to positive growth signals from the United States and China in past weeks

Closer home, the yields on 10-year 8.79% - 2021 were trading flat at its previous close of 7.86% on Monday.

The benchmark five-year interest rates were trading down by 1 basis point at 7.12% from its previous close of 7.13% on Monday.

The Reserve Bank of India has announced the auction of 91-day and 364-day Government of India Treasury Bills for notified amount of Rs 5,000 crore each. The auction will be conducted on January 23, 2013 using 'Multiple Price Auction' method.

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