Latest news with #DharamrajDhutia
Mint
10 hours ago
- Business
- Mint
Mild recovery in India bonds; key debt auction to decide next direction
MUMBAI, June 20 (Reuters) - Indian government bonds recovered slightly in early deals on Friday following a massive selloff in the previous session on concerns about rising oil prices, with the bonds' next move dependent on the demand at the weekly debt auction. The yield on the benchmark 10-year bond was at 6.2963% as of 10:00 a.m. IST, compared with the previous close of 6.3095%. The five-year 6.75% 2029 bond was at 5.9924% after ending at 6.0236% on Thursday. New Delhi will sell bonds worth 270 billion rupees ($3.12 billion), which includes 150 billion rupees of the 2029 bond. The yield on this paper has risen 20 basis points in the last two weeks. "So far, volumes are too shallow to judge whether the move will sustain through the day," said a trader with a private bank. Bond yields jumped sharply in the previous session as worries that oil prices will further spike have kept investors on edge. Yields move inversely to prices. The benchmark Brent crude was around $77 per barrel during Asia hours on Friday as the Israel-Iran conflict continued, while uncertainty about potential U.S. involvement encouraged caution among investors. India imports a bulk of its crude oil needs, and higher prices could impact its inflation outlook. Earlier this month, the Reserve Bank of India reduced its inflation forecast for the current fiscal year to 3.7%, while cutting its key lending rate by a steeper-than-expected 50 basis points. It, however, reverted to a "neutral" stance from "accommodative", prompting analysts to forecast the end of the monetary easing cycle. The minutes of this meeting are due after market hours on Friday. Indian overnight index swap (OIS) rates eased after witnessing paying pressure in the previous session. The one-year OIS rate and the two-year OIS rate were at 5.51% each, while the liquid five-year was 2 bps down at 5.73% ($1 = 86.5850 Indian rupees) (Reporting by Dharamraj Dhutia; Editing by Harikrishnan Nair)
Mint
2 days ago
- Business
- Mint
India bond yields seen little changed; traders eye fresh directional cues
MUMBAI, June 19 (Reuters) - Indian government bond yields are likely to be little changed in opening deals on Thursday, as oil prices were steady, while the U.S. Federal Reserve policy decision did little to affect sentiment. The yield on the benchmark 10-year bond is expected to move between 6.26% and 6.29%, a trader at a private bank said, compared with the previous close of 6.2615%. The five-year 6.75% 2029 bond ended at 5.9434% on Wednesday. "The Fed decision turned out to be a sort of non-event and even oil did not move much yesterday, so overall we should see a sideway trend in bonds," the trader said. Apart from oil, the market will also eye demand at the debt auction and the minutes of the Reserve Bank of India's latest monetary policy meeting, both due on Friday, the trader added. The Fed held interest rates steady on Wednesday and maintained expectations for two rate cuts this year, but a rising minority also expects no rate cuts at all. Fed Chair Jerome Powell cautioned against putting too much weight on rate cuts and said he expects "meaningful" inflation ahead. The 10-year U.S. yield stayed around 4.40%, while the benchmark Brent crude remained around $76 per barrel. Brent has gained over 10% in the last five sessions on worries that the Iran-Israel conflict could disrupt supplies. India imports a bulk of its crude oil needs and higher prices could impact the nation's inflation outlook. Earlier this month, the RBI reduced its inflation forecast for the current year to 3.7%, while cutting its key lending rate by a steeper-than-expected 50 basis points. It, however, reverted to a "neutral" stance from "accommodative", prompting analysts to forecast the end of the easing cycle. Indian overnight index swap (OIS) rates are expected to be range-bound. The one-year OIS rate was at 5.48%, while the two-year OIS rate was at 5.46%. The liquid five-year ended at 5.68%. KEY INDICATORS: ** Brent crude futures fell 0.4% to $76.40 per barrel after rising 0.3% in the previous session ** Ten-year U.S. Treasury yield at 4.3950%; two-year yield at 3.9410% (Reporting by Dharamraj Dhutia; Editing by Eileen Soreng)
Yahoo
4 days ago
- Business
- Yahoo
India cenbank seeks market views on aligning call money rate with repo, sources say
By Siddhi Nayak and Dharamraj Dhutia MUMBAI (Reuters) -The Reserve Bank of India has sought feedback from large market participants on aligning the overnight interbank call money rate more closely with the policy repo rate, five treasury officials aware of the discussions told Reuters on Monday. The move follows a Reuters report last week that said the RBI wants the overnight call rate to broadly align with the policy repo rate and is considering steps to ensure that happens. The policy rate currently stands at 5.50%, while the overnight call rate averages 5.30% and the TREPS rate hovers near 5.20%. The overnight call rate and TREPS rate have averaged below the policy rate since April. A persistent gap between the RBI's operative rate and the policy rate typically signals that banks are accessing cheaper funding than what the central bank is comfortable with. The RBI spoke with large treasury officials on Friday to review liquidity conditions and understand why the overnight call rate — the operative policy target — has been persistently trailing the repo rate, two of the sources said. None of the sources wanted to be named because they are not authorised to speak to the media. The RBI did not immediately reply to a Reuters email seeking comment. The central bank is also keen to understand why treasury bill yields have spiked in the last week, the two sources added. The yield on 364-day notes was sharply higher than estimates last Wednesday. "The motive seemed to be to sensitise the market that a variable rate reverse repo auction would be in the offing," a senior official at a state-run bank said. The source had added that the RBI could start conducting variable rate reverse repo auctions to suck out surplus liquidity as and when required. The weighted average overnight call rate has remained well below the RBI's key repo rate and closer to the policy corridor's floor, the Standing Deposit Facility rate, for the past few weeks. On June 6, the RBI slashed its key policy rate by 50 basis points, but changed its stance to neutral, indicating limited room for further cuts. The RBI also announced a reduction in banks' cash reserve ratio by 100 basis points September onwards. The central bank also stopped conducting daily fund infusion through variable rate repo since June 11, which market took as an indication that the RBI may move towards VRRR soon. Market participants have requested that the RBI avoid shocks in liquidity management which would help avoid volatility in short-term rates, another treasury official said. "Given that the focus of monetary policy is on enhancing transmission, the expectation channel is equally important. Hence, it would be better to move overnight rates towards repo rate after some time, allowing transmission to gain pace," said Gaura Sen Gupta, chief economist with IDFC First Bank.
Mint
4 days ago
- Business
- Mint
India cenbank seeks market views on aligning call money rate with repo, sources say
By Siddhi Nayak and Dharamraj Dhutia MUMBAI, - The Reserve Bank of India has sought feedback from large market participants on aligning the overnight interbank call money rate more closely with the policy repo rate, five treasury officials aware of the discussions told Reuters on Monday. The move follows a Reuters report last week that said the RBI wants the overnight call rate to broadly align with the policy repo rate and is considering steps to ensure that happens. The policy rate currently stands at 5.50%, while the overnight call rate averages 5.30% and the TREPS rate hovers near 5.20%. The overnight call rate and TREPS rate have averaged below the policy rate since April. A persistent gap between the RBI's operative rate and the policy rate typically signals that banks are accessing cheaper funding than what the central bank is comfortable with. The RBI spoke with large treasury officials on Friday to review liquidity conditions and understand why the overnight call rate — the operative policy target — has been persistently trailing the repo rate, two of the sources said. None of the sources wanted to be named because they are not authorised to speak to the media. The RBI did not immediately reply to a Reuters email seeking comment. The central bank is also keen to understand why treasury bill yields have spiked in the last week, the two sources added. The yield on 364-day notes was sharply higher than estimates last Wednesday. "The motive seemed to be to sensitise the market that a variable rate reverse repo auction would be in the offing," a senior official at a state-run bank said. The source had added that the RBI could start conducting variable rate reverse repo auctions to suck out surplus liquidity as and when required. The weighted average overnight call rate has remained well below the RBI's key repo rate and closer to the policy corridor's floor, the Standing Deposit Facility rate, for the past few weeks. On June 6, the RBI slashed its key policy rate by 50 basis points, but changed its stance to neutral, indicating limited room for further cuts. The RBI also announced a reduction in banks' cash reserve ratio by 100 basis points September onwards. The central bank also stopped conducting daily fund infusion through variable rate repo since June 11, which market took as an indication that the RBI may move towards VRRR soon. Market participants have requested that the RBI avoid shocks in liquidity management which would help avoid volatility in short-term rates, another treasury official said. "Given that the focus of monetary policy is on enhancing transmission, the expectation channel is equally important. Hence, it would be better to move overnight rates towards repo rate after some time, allowing transmission to gain pace," said Gaura Sen Gupta, chief economist with IDFC First Bank. This article was generated from an automated news agency feed without modifications to text.
Mint
5 days ago
- Business
- Mint
Crude moves to dictate direction for Indian debt, rupee; RBI key for currency
By Dharamraj Dhutia and Nimesh Vora MUMBAI, June 16 (Reuters) - The direction of Indian government bonds and rupee this week will hinge on how the Israel-Iran conflict unfolds and its impact on crude oil prices, while the extent to which the central bank steps in to manage currency volatility will be crucial. Crude prices had soared on Friday following Israel's attack on Iran. On Monday, Brent crude jumped at open before pulling back. Brent, which climbed past $78 at open on Monday, was last at $74.78. The Israel-Iran conflict continues to escalate. Israel and Iran launched fresh attacks on Sunday, killing and wounding civilians. Early on Monday, Israel's air force attacked with surface-to-surface missile sites in central Iran. On Friday, the rupee dropped 0.6%, posting its largest one-day decline in over a month. Bankers said the Reserve Bank of India likely intervened to support the currency. "The RBI, in a way, indicated that it will not tolerate a big move that is purely driven by the unfolding Middle East conflict," said Kunal Kurani, vice president at risk advisory firm Mecklai Financial. "I would expect that intraday ranges will now widen and news headline risk will be high." With India importing the bulk of its crude requirements, any sustained increase in oil prices tends to widen the trade deficit, stoke inflation concerns, and increase demand for dollars from oil marketing companies—all of which are bearish for the rupee. Apart from oil, focus will be on central bank monetary policy meetings, with the Bank of Japan, Federal Reserve, and Bank of England all due to announce their decisions this week. Elevated inflation will impact demand for Indian bonds, as it further reduces the likelihood of additional rate cuts, especially after the RBI delivered an outsized 50 bps cut on June 6. Meanwhile, India's 10-year benchmark 6.33% 2035 bond yield ended at 6.2996%. The 10-year yield rose 6 basis points last week, posting its biggest weekly rise since the week ended December 20. Traders expect the yield to move in a range of 6.27% to 6.35% this week. Bond yields jumped despite the steepest cut in policy rates in five years, as traders chose to focus on the central bank's guidance that the easing cycle is over. The impact of the central bank's change in monetary policy stance and the abrupt stoppage of daily fund infusion hurt investor sentiment, leading to selling across the curve. Since Wednesday, the RBI stopped conducting overnight repos, which it had started in the middle of January. "We also wait to see if the RBI announces any daily VRRR (variable rate reverse repo) operations to prevent TREPS rate from remaining below the SDF rate, particularly as the monetary policy stance has turned neutral now and RBI discontinuing daily VRR auctions," Kaushik Das, Chief India Economist at Deutsche Bank said. KEY EVENTS: ** India May wholesale price inflation - June 16, Monday (12:00 p.m. IST) ** Minutes of Reserve Bank of India's June monetary policy meeting - June 20, Friday (5:00 p.m. IST) ** Bank of England rate decision - June 19, Thursday (Reuters poll: No change expected) U.S. ** May import prices - June 17, Tuesday (6:00 p.m. IST) ** May retail sales - June 17, Tuesday (6:00 p.m. IST) ** May industrial production - June 17, Tuesday (6:45 p.m. IST) ** May housing starts number - June 18, Wednesday (6:00 p.m. IST) ** Initial weekly jobless claims for week ended June 9 - June 18, Wednesday (6:00 p.m. IST) ** Federal Reserve monetary policy decision - June 18, Wednesday (11:30 p.m. IST)(Reuters poll: no change) ** June Philly Fed Business index - June 20, Friday (6:00 p.m. IST) (Reporting by Dharamraj Dhutia and Nimesh Vora; Editing by Tasim Zahid)
