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Our Bureau

Mumbai, April 16

Bond prices dropped by around 2 paise due to tight liquidity in the system. "The first phase of the CRR hike to 6.25 per cent came into effect on April 14, which has drained out the excess cash from the system," said a dealer at a private bank. Banks borrowed over Rs 13,800 crore from the Reserve Bank of India through the repo window.

According to dealers, liquidity will continue to remain a concern as the second phase of CRR hike to 6.5 per cent will come into effect on April 28. "The 10-year yield is expected to touch 8.20 per cent this week," said the dealer. The 8.07 per cent-10 year-2017 paper opened at Rs 99.93 (8.08 per cent YTM) and closed at Rs 99.78 (8.10 per cent YTM) against Rs 99.80 (8.10 per cent YTM) on Friday. The 7.38 per cent- 8-year-2015 paper opened at Rs 95.35 (8.16 per cent YTM) and closed at Rs 95.05 (8.21 per cent) against Friday's close of Rs 95.30 (8.16 per cent YTM).

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