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Bonds yields soar following Rupee’s depreciation

31 Jul 2013 Evaluate

Bond yields rose higher after as the rupee tumbled to a near record low, raising concerns the central bank could announce additional measures to support the currency. Indian rupee, prolonging its freefall, has yet again breached the perilous 61/$ level on persistent month-end dollar demand from importers and on the back of strengthening in the US currency overseas

On the global front, U.S. Treasuries prices were little changed on Tuesday as caution ruled the market a day ahead of a policy statement from the Federal Reserve that is expected to provide indications of when the Fed will begin to scroll back on its stimulus, as well as the release of data on the economy. Meanwhile, Brent crude hovered below $107 per barrel on Wednesday ahead of the outcome of a U.S. Federal Reserve meeting and economic data that will be scoured for hints on the outlook for demand from the world's top oil consumer.

Back home, the yields on 10-year 7.16% - 2023 bonds were trading 5 basis points higher at 8.30% from its previous close of 8.25% on Tuesday.

The benchmark five-year interest rate swaps rose 9 basis points higher to 8.48% from its previous close of 8.39% on Tuesday.

The Government of India have announced the sale (re-issue) of four dated securities for Rs  15,000 crore on August 2, 2013 (i) “7.28 percent Government Stock 2019” for a notified amount of Rs 3,000 crore (nominal) through price based auction; (ii) “7.16 percent Government Stock 2023” for a notified amount of Rs 7,000 crore (nominal) through price based auction;(iii) “8.28 percent Government Stock 2032” for a notified amount of Rs 3,000 crore (nominal) through price based auction, and (iv) “7.40 percent Government Stock 2035” for a notified amount of Rs 2,000 crore (nominal) through price based auction. The auctions will be conducted using uniform price method. The auctions will be conducted by the Reserve Bank of India, Fort, Mumbai on August 2, 2013 (Friday).

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