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Bond yields spike up tracing Rupee’s slump to record low level

08 Jul 2013 Evaluate

Bond yields crept higher amidst Rupee slump to a record low, spurring concerns that foreign fund outflows will continue from the debt markets. The Indian rupee fell to a record low of 61 to a dollar in early deals on Monday on fears that India will be among the worst hit among emerging markets as and when the Federal Reserve begins to taper off its bond purchase programme.

Meanwhile, the sharp spike of the yields is also being witnessed as Fixed Income and Money markets Derivatives Association (FIMMDA) has removed trading bands for government bonds today. The move was apparently triggered by an expected rally in the bonds, after US unemployment data came out positive on Friday.

On the global front, Yields on US Treasuries hit multi-year highs on Friday after a strong monthly jobs report added to speculation of an early end to cheap Fed money. Meanwhile, Brent crude futures rose above $108 to the highest in more than three months on Monday, extending last week's gains as tensions in Egypt stoked concerns about global oil supplies.

Back home, the yields on 10-year 7.16% - 2013 bonds were trading 7 basis points at 7.57% from its previous close of 7.50 on Friday.

The benchmark five-year interest rate swaps were trading 10 basis points higher at 7.64% from its previous close of 7.54% on Friday.

The Reserve Bank of India has announced the auction of 91 and 364 day Government of India Treasury Bills for notified amount of Rs 7,000 crore each. The auction will be conducted on July 10, 2013 using 'Multiple Price Auction' method.

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