Bond yields at 9-month low as RBI’s buyback plan fuels optimism

The government 10-year bonds gained on Wednesday, pushing yields to the lowest level in nine months, on optimism that debt purchases by the RBI will ease a cash squeeze. The RBI will buy as much as R10,000 crore of fixed-income securities on Friday, it said in a statement. The monetary authority, which has bought R71,900 crore of notes since November, refrained from purchasing debt in open-market operations last week.The finance ministry has a target of borrowing a record R5.1 lakh crore in the fiscal year ending March 31.“Bond purchases will help mitigate the liquidity crunch and reduce pressure from heavy debt sales,” said Anoop Verma, a fixed-income trader at Development Credit Bank. “The open-market operations may help soften yields further.”

Source: Financial Express