India's bonds fell 10 years, pushing the yield to its highest level in more than three months, amid expectations that the central bank will increase borrowing costs for the fifth time this year to combat inflation.
Include an increase in prices "may have to get precedence over other political objectives," said India's central bank yesterday. And bond yields rose five basis points this week before an auction of 80 billion rupees (1.7 billion dollars) of bonds today, and 120 billion rupees of government bonds on Aug. 27.
"We can expect more than one round of raising interest rates as soon as next month," said S.. Srikumar, a fixed-income trader at the Bank's state-owned institution in Mumbai. "Investors may also refrain from adding to their positions as sales of more debt is due."
The yield rose to 7.80 percent bond due May 2020 basis points, or 0.01 percentage point, to 8.02 percent as of 10:20 in Mumbai, according to the trade regime and the central bank. He touched on the rate of 8.03 percent earlier, its highest level since May 3. Price fell 0.12, or 12 paise per 100 rupee face amount, to 98.50.
The central bank may raise its policy rates by 25 basis points each in the policy review on 16 September, said Srikumar. Reverse repurchase rate, where it drains cash from the banks, at 4.5 percent, while the repo rate, which is the imposition of fees on loans and overnight at an interest rate of 5.75 percent. The monetary authority last raised interest rates on July 27.
Last month, the Reserve Bank raising its forecast for inflation in wholesale prices at the end of March 2011 to 6 percent from 5.5 percent. Rate was 9.97 percent in July after a decade more than 10 percent in the previous five months.
To connect to a journalist in this story: V. Ramakrishnan in Mumbai
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