2 weeks Ago
By Dharamraj Dhutia MUMBAI, April 22 (Reuters) - Indian government bond yields are expected to edge higher in early deals on Tuesday, tracking U.S. yields and as demand for bonds could ease following the central bank's revised liquidity norms.
The benchmark 10-year bond yield is likely to move between 6.32% and 6.36%, a trader at a private bank said, compared with its previous close of 6.
3164%, its lowest since November 9, 2021. "As an immediate fallout, we should see some negative reaction from the revised guidelines, as theoretically it is seen reducing demand for bonds," the trader said. "However, the underlying sentiment continues to be supportive of bulls, and that should put a lid on any large upside to yields.
" The Reserve Bank of India said on Monday it will direct lenders to assign a lower-than-proposed buffer rate of 2.5% on digitally linked deposits, with a one-year compliance deadline. In July, the RBI proposed that banks set aside an additional 5% 'run-off factor' on digitally accessible retail deposits to better manage risks in case of quick and heavy withdrawals via internet or mobile banking.
Traders said that if the run-off factors had not been reduced, there would have been a rush to buy government securities to meet these guidelines. The focus was also on the central bank's debt purchase as it will buy bonds worth 200 billion rupees ($2.35 billion) on Tuesday, its fourth such auction this month.
It has already bought bonds worth 800 billion rupees in April and is scheduled to buy 200 billion rupees of debt next week. In January-March, it bought bonds worth 2.45 trillion rupees through OMOs and another 388.
25 billion rupees through secondary market debt purchases. RATES India's overnight index swap rates are expected to move slightly higher as the 10-year U.S.
Treasury yield rises to 4.40%, traders said. The one-year OIS rate two-year and five-year OIS rates have declined around 30 basis points so far in April.
KEY INDICATORS: ** Brent crude futures were up 0.6% at $66.65 per barrel, after easing 2.
5% in the previous session ** Ten-year U.S. Treasury yield at 4.
4106%; two-year yield at 3.7791% ** Indian states aim to raise 108.70 billion rupees through bond sale ** RBI to conduct 1-day variable rate repo auction for 1.
25 trillion rupees ($1 = 85.2140 Indian rupees) (Reporting by Dharamraj Dhutia Editing by Eileen Soreng).
