Indian Government bonds end sharply lower on continuous Rupee depreciation - ICICI Bank : Treasury Research

Indian Government bonds ended sharply lower today as continued depreciation in the Rupee raised concerns that the RBI might take further measures to tighten liquidity. Higher than expected cut-off prices in today's auction of dated securities worth INR 160 bn also weighed on the Gilts. The cut-off yield for the benchmark 7.16% bond came at 8.74%, higher than market consensus of 8.70%. Further, there was a devolvement of bonds to the tune of INR 14.44 bn in the auction. The yield on the benchmark 7.16% bond due 2023 intraday rose to a 21-month high of 8.90% and ended the day at 8.88%, as against Wednesday's close of 8.50%.

India's call rate closed at 10.15%, as against Wednesday's close of 10.20%. The RBI injected INR 387.61 bn (gross) into the banking system today, as against INR 388.36 bn (gross) on Wednesday.

US Treasuries are trading lower today following better than expected initial jobless claims data yesterday which added to the fears of an early tapering of Fed's asset purchase program. Meanwhile, markets will closely watch the University of Michigan consumer confidence data for further cues. The 10-year yield is currently trading at 2.79% as against yesterday's close of 2.77%.

Source : Equity Bulls

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