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Indian bond yields up for 3rd day; cbank chief comments on inflation hurt
May 30, 2013 / 12:06 PM / 4 years ago

Indian bond yields up for 3rd day; cbank chief comments on inflation hurt

* 10-year bond yield ends 5 bps higher at 7.44 pct
    * India cbank chief says several upside risks to inflation
remain
    * Indian economy likely grew 4.8 pct in March quarter - poll

    By Subhadip Sircar
    MUMBAI, May 30 (Reuters) - Indian government bond yields
spiked in late trading on Thursday, rising for a third session
to a two-week high, after the central bank chief said retail
inflation remained high, denting growing expectations of a rate
cut in June.
    The comments came ahead of the release of March quarter GDP
data on Friday which is likely to be a key indicator to the
central bank's rate view.
    Reserve Bank of India Governor Duvvuri Subbarao said retail
inflation is still high, and several upside risks to inflation
remain. 
    The comments reversed the fall in yields earlier in the
session which came after global crude oil prices fell below $102
a barrel and was on track for a third straight month of losses.
    "The RBI wants to see more evidence of lower inflation
trajectory, particularly at the retail level," said A. Prasanna,
chief economist at ICICI Securities Primary Dealership.
    "Market should recognise that RBI has carried out 75 basis
points cuts in CY13 already and is under no compulsion to keep
cutting in every policy review."
    India's economic growth probably nudged up in the three
months to March from a near four-year low the previous quarter,
a Reuters poll showed on Tuesday, suggesting a gradual
turnaround from a prolonged slowdown. 
    The median consensus of 37 economists showed gross domestic
product expanded 4.8 percent year-on-year, better than the 4.5
percent growth in the previous three months, which was the
lowest in fifteen quarters.
    The data will be a crucial input for the RBI with a
lower-than-expected reading likely to further bolster
expectations of a rate cut after headline inflation fell below 5
percent last month.
    Bond dealers also said the cash situation might see some
improvement on bond redemptions of around 114.40 billion rupees
on Thursday. 
    The old benchmark 10-year bond closed 5
basis points higher at 7.44 percent. It rose to 7.45 percent
earlier in the session, its highest since May 16.
    The 7.16 percent 2023 bond, which will be
reissued in Friday's auction, closed up 3 basis points at 7.19
percent. 
   Total volumes stood at an average 627.50 billion rupees.
   Interest rate swaps rose in line with bond yields. 
   The five-year swap rate rose 3 bps to 6.90
percent.
   The one-year swap rate ended 4 bps higher at
7.17 percent.

 (Editing by Anand Basu)

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