DBS expects RBI to gradually lower rates

Fri Feb 1, 2013 1:04pm IST

A man makes a phone call while standing near a Reserve Bank of India (RBI) crest at the RBI headquarters in Mumbai January 29, 2013. REUTERS/Vivek Prakash

A man makes a phone call while standing near a Reserve Bank of India (RBI) crest at the RBI headquarters in Mumbai January 29, 2013.

Credit: Reuters/Vivek Prakash

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Reuters Market Eye - DBS says India's 10-year bond yield will be the only one falling over the next six months among the 10 Asian markets it tracks.

DBS expects RBI to gradually lower rates at a pace of 25 bps per quarter, forecasting that demand pressures behind inflation are easing considerably.

"The combination of high yields, a downward sloping forward path for policy rates and the prospect of more currency stability should see foreign interest in the gilt market remaining strong," DBS writes.

That's a contrast to Asia, where the prospects of stronger global economic growth and rising U.S. Treasury yields are putting bearish steepening pressure on the short-ends of Asian yield curves, it adds.

(Reporting by Subhadip Sircar)

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