MUMBAI: India's 10-year bond yield spiked on Wednesday as traders were disappointed by the Reserve Bank of India's move to further cap the overnight borrowing window while the resumption of debt auctions later this week also weighed.
The 10-year yield was up 9 basis points at 8.89 percent compared with its close of 8.80 percent on Friday. Bond markets were shut on Monday and Tuesday.
In a move to impose more discipline on lenders and in line with global practice, the central bank cut the amount of overnight funding it makes available to banks, nudging them to use longer-term funding in a push to deepen financial markets.
Traders also anticipate a sizeable devolvement at Friday's 160 billion rupee ($2.68 billion) bond auction, as most of the bonds at offer are illiquid.
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