MUMBAI: Indian government bond yields were lower in early trading on Wednesday, tracking an overnight fall in oil prices, which may help control rising inflation.
The underlying sentiment remains positive after the Reserve Bank of India, in its monthly bulletin published earlier this week, said retail inflation is set to ease from September levels, while economic activity is poised to expand.
The benchmark 10-year government bond yield was at 7.3955% as of 0430 GMT. The yield had ended at 7.4261% on Tuesday.
“Market is comfortable with the benchmark yield at 7.40% and any rise could see addition of positions,” a trader with a primary dealership said.
Global oil prices fell on Tuesday, with the benchmark Brent crude contract ending at $90 per barrel, on fears of an economic slowdown and lower Chinese fuel demand.
China, the world’s top crude oil importer, indefinitely delayed the release of economic indicators scheduled to be published on Tuesday, which the market took as an indication that fuel demand is significantly depressed in the region.
India is one the largest importers of crude oil and easing prices of the commodity are expected to help reduce inflationary pressures. Annual retail inflation had accelerated to a five-month high of 7.41% in September, its ninth straight reading above the central bank’s targeted 2%-6% band.
The RBI’s rate-setting panel has raised the benchmark repo rate by 190 basis points (bps) since May through a 50 bps hike in September, to tame stubbornly high inflation.
Jayant Varma, a member of the RBI’s monetary policy committee, told Reuters that the central bank should pause rate hikes, despite unacceptably high inflation, to avoid stalling a recovery in economic growth.
The RBI will auction Treasury Bills worth $2.67 billion later in the day. At a similar auction last week, the cut-off yield on 364-day papers had risen above 7% for the first time in nearly four years.
The underlying sentiment remains positive after the Reserve Bank of India, in its monthly bulletin published earlier this week, said retail inflation is set to ease from September levels, while economic activity is poised to expand.
The benchmark 10-year government bond yield was at 7.3955% as of 0430 GMT. The yield had ended at 7.4261% on Tuesday.
“Market is comfortable with the benchmark yield at 7.40% and any rise could see addition of positions,” a trader with a primary dealership said.
Global oil prices fell on Tuesday, with the benchmark Brent crude contract ending at $90 per barrel, on fears of an economic slowdown and lower Chinese fuel demand.
China, the world’s top crude oil importer, indefinitely delayed the release of economic indicators scheduled to be published on Tuesday, which the market took as an indication that fuel demand is significantly depressed in the region.
India is one the largest importers of crude oil and easing prices of the commodity are expected to help reduce inflationary pressures. Annual retail inflation had accelerated to a five-month high of 7.41% in September, its ninth straight reading above the central bank’s targeted 2%-6% band.
The RBI’s rate-setting panel has raised the benchmark repo rate by 190 basis points (bps) since May through a 50 bps hike in September, to tame stubbornly high inflation.
Jayant Varma, a member of the RBI’s monetary policy committee, told Reuters that the central bank should pause rate hikes, despite unacceptably high inflation, to avoid stalling a recovery in economic growth.
The RBI will auction Treasury Bills worth $2.67 billion later in the day. At a similar auction last week, the cut-off yield on 364-day papers had risen above 7% for the first time in nearly four years.
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