January 29, 2018 / 10:39 AM / 4 months ago

India's bonds slump on worries about higher fiscal deficit, interest rates

MUMBAI (Reuters) - India’s bond markets extended declines, sending the 6.79 percent 10-year bond yield up as much as 13 basis points on worries the government would widen its fiscal deficit target and after an official said there was less scope for monetary easing.

Chief economic advisor Arvind Subramanian gestures as he addresses the media during a news conference, in New Delhi, India, January 29, 2018. REUTERS/Adnan Abidi

Bonds took a hit after the government’s annual economic survey called for a pause in fiscal consolidation, leading to concerns that New Delhi would widen its fiscal deficit targets when it unveils its annual budget on Thursday.

The Finance Ministry’s chief economic adviser, Arvind Subramanian, also told a news conference he saw less scope for monetary policy easing because of a recent acceleration in inflation, further pressuring bonds.

The 6.79 percent 10-year bond yield rose to as high as 7.61 percent, while the recently unveiled 7.17 percent 10-year bond yield was up 10 bps at 7.41 percent.

Reporting by Rafael Nam; Editing by Amrutha Gayathri

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