off-the-wire

INDIA BONDS-India bond yields steady as investors eye RBI minutes

Kitco Media
By Reuters
Published:
Updated:
Reuters
By Dharamraj Dhutia MUMBAI, April 20 (Reuters) - Indian government bond yields ended largely unchanged ahead of the crucial minutes of the Reserve Bank of India's latest policy meeting, due after market hours. The 10-year benchmark 7.26% 2032 bond yield ended at 7.2206%, after closing at 7.2251% in the previous session. "The minutes could provide some more clarity on the surprise pause, but it seems the central bank may not be in a hurry to cut rates, especially when the Federal Reserve is still in the process of hiking rates," said Abhishek Upadhyay, senior economist at ICICI Securities Primary Dealership. Earlier this month, RBI had surprised markets by holding its key policy rate at 6.50%, against wide expectations of a 25 basis-point hike, and the minutes could provide more clarity on the rationale.


Even as the central bank Governor Shaktikanta Das said that the pause was only for April policy and it was not a pivot, the majority of the market participants now believe that the RBI will maintain a prolonged pause, with some also expecting the start of the rate cutting cycle before 2023 ends.


India's retail inflation fell to 5.66% in March, below the RBI's upper tolerance level of 6%, and further cemented bets of prolonged pause and reversal of rate hikes. Nomura expects the central bank to cut the rate by an aggregate of 75 bps in this financial year starting from October.


Market participants will also keep an eye on moves by state-run banks, as they are likely to wait for government bond prices to drop before rebuilding positions, having sold over 460 billion rupees ($5.60 billion) of bonds in the last 25 sessions, according to Clearing Corp of India data.


New Delhi will raise 330 billion rupees through the sale of bonds on Friday, which includes the 7.26% 2033 note.
($1 = 82.1250 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)

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