India Bonds Gain as Narrowing Deficit Leads to Inflow Optimism India’s 10-year government bonds rose, pushing the yield to the lowest in two weeks, on optimism a shrinking current-account deficit will boost the rupee and prompt foreign investors to buy more local debt. The gap in the broadest measure of trade narrowed in the October-December period to $4.2 billion, the least in four years, compared with $5.2 billion in the previous three months, the Reserve Bank of India said in a statement yesterday. The improvement pushed the rupee to the highest level since Jan. 17 today. Overseas funds have added $4.9 billion to their holdings of rupee-denominated notes this year, after paring investments by a record $8 billion in 2013. The yield on the 8.83 percent sovereign notes due November 2023 fell four basis points, or 0.04 percentage point, to 8.80 percent as of 10:02 a.m. in Mumbai, according to the central bank’s trading system. That’s the lowest level since Feb. 21. “The current-account data certainly augurs well for the currency, and that has led to optimism foreigners will buy more debt,” said Debendra Kumar Dash, a fixed-income trader at DCB Bank in Mumbai. India, the world’s second-biggest user of gold, raised taxes on imports of the metal three times last year to help pare a trade imbalance that has weighed on the rupee. The October-December deficit is the least in data going back to 2010, which are calculated using the latest applicable International Monetary Fund guidelines. One-year interest-rate swaps, derivative contracts used to guard against swings in funding costs, fell three basis points to 8.66 percent, data compiled by Bloomberg show.
Posted on: Thu, 06 Mar 2014 05:10:44 +0000
Trending Topics
Recently Viewed Topics
© 2015