The Hindu Business Line : Rupee unchanged; bond prices fall

The forward premia market remained dull with the 6-month premium closing at 1.5 per cent (1.48 per cent) and the 12-month premium closing at 1.394 per cent (1.32 per cent).

"All the banks are following a wait-and-watch policy. They are waiting until March 31 before they take any fresh position," said the dealer

Bond prices fell by around 10 paise on expectations of a 25 basis point hike in the US Fed rate.

The 7.38 per cent 10-year benchmark paper closed at Rs 104.90 (6.72 per cent YTM) on Tuesday as against Monday's close of Rs 105 (6.71 per cent YTM). It had opened at Rs 105.02 (6.706 per cent YTM).

"Given the current account deficit, it is possible that the US Fed might hike their rate more aggressively than the otherwise `measured pace' that they speak of. If the 10-year yields harden in the US, the Indian bonds will follow suit," said a dealer at a private bank.

Besides, the borrowing calendar, which will be unveiled soon, might show the government's bias towards long-term papers.

"If the government borrows heavily in the first half of the year, the bond market could witness a bleak future. The yield curve will be very steep," he said.

In the one-day reverse repo under the liquidity adjustment facility, RBI received and accepted 23 bids amounting to Rs 17,920 crore. Call rates closed at 4.75 per cent. In the CBLO market, 89 trades aggregating Rs 2,248 crore were put through in the rate range of 4-4.90 per cent.

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