By -
Jun 4, 2014
Indian 10-year government bonds rose,
pushing the yield to a four-month low, after the central bank
signaled it could ease monetary policy if consumer-price gains
slow more than anticipated.
Should disinflation be faster than expected, “it will provide headroom for an easing of the policy stance,” the Reserve Bank of India said in a statement yesterday after it left the repurchase rate at 8 percent, as predicted by all 38 economists surveyed by Bloomberg. Tightening won’t be warranted if consumer-price inflation stays on course to slow to 8 percent in January 2015 and 6 percent a year later, the RBI said.
“The statement from the RBI that there is headroom to ease if inflation slows is driving the bonds higher,” said Paresh Nayar, the Mumbai-based head of currency and money markets at FirstRand Ltd. “Yesterday’s statement not only gives comfort of no rate hikes, but also highlights a possibility of rate cuts.”
The yield on the 8.83 percent government notes due November 2023 declined one basis point, or 0.01 percentage point, to 8.59 percent as of 10:41 a.m. in Mumbai, according to prices from the central bank’s trading system. It fell to 8.57 percent earlier, the lowest level since Jan. 21.
Consumer-price inflation has stayed below 9 percent for the first four months of the year after topping 11 percent in November, official data show.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, declined five basis points to 8.21 percent, data compiled by Bloomberg show.
The rupee was little changed at 59.385 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, slipped one basis point to 7.28 percent, data compiled by Bloomberg show.
Three-month offshore non-deliverable forwards declined 0.1 percent to 60.30 per dollar, according to data compiled by Bloomberg. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
To contact the reporter on this story: Divya Patil in Mumbai at dpatil7@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Andrew Janes, Simon Harvey
Should disinflation be faster than expected, “it will provide headroom for an easing of the policy stance,” the Reserve Bank of India said in a statement yesterday after it left the repurchase rate at 8 percent, as predicted by all 38 economists surveyed by Bloomberg. Tightening won’t be warranted if consumer-price inflation stays on course to slow to 8 percent in January 2015 and 6 percent a year later, the RBI said.
“The statement from the RBI that there is headroom to ease if inflation slows is driving the bonds higher,” said Paresh Nayar, the Mumbai-based head of currency and money markets at FirstRand Ltd. “Yesterday’s statement not only gives comfort of no rate hikes, but also highlights a possibility of rate cuts.”
The yield on the 8.83 percent government notes due November 2023 declined one basis point, or 0.01 percentage point, to 8.59 percent as of 10:41 a.m. in Mumbai, according to prices from the central bank’s trading system. It fell to 8.57 percent earlier, the lowest level since Jan. 21.
Consumer-price inflation has stayed below 9 percent for the first four months of the year after topping 11 percent in November, official data show.
One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, declined five basis points to 8.21 percent, data compiled by Bloomberg show.
The rupee was little changed at 59.385 per dollar in Mumbai, according to prices from local banks compiled by Bloomberg. One-month implied volatility, a gauge of expected moves in the exchange rate used to price options, slipped one basis point to 7.28 percent, data compiled by Bloomberg show.
Three-month offshore non-deliverable forwards declined 0.1 percent to 60.30 per dollar, according to data compiled by Bloomberg. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.
To contact the reporter on this story: Divya Patil in Mumbai at dpatil7@bloomberg.net
To contact the editors responsible for this story: James Regan at jregan19@bloomberg.net Andrew Janes, Simon Harvey
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