Bond yields edged higher after the rupee tumbled to a record low, raising concerns the central bank could announce additional tightening measures to support the currency. Indian rupee, prolonging its freefall, breached the perilous 61/$ level to hit a record low as the dollar strengthened against a basket of currencies previous day giving rise to the possibility of an early tapering of bonds by the US Fed.
On the global front, U.S. government debt prices fell on Monday as traders trimmed bond holdings after surprisingly strong data on the U.S. services sector and before auctions of new coupon supply. Meanwhile, Brent futures slipped towards $108 a barrel on Tuesday as supply fears from key exporters such as Libya eased, but losses were stemmed with a forecast fall in crude inventories in the world's largest oil consumer the United States.
Back home, the yields on 10-year 7.16% - 2023 bonds were trading 4 basis points higher at 8.24% from its previous close of 8.20% on Monday.
The benchmark five-year interest rate swaps were trading 8 basis points higher at 8.42% from its previous close of 8.34% on Monday.
The Government of India had 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.
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