Bond yields near two-month high

Government bonds fell, pushing yields to the highest in almost two months, on speculation that investors are selling the securities to free up cash before a debt auction tomorrow.

Bonds maturing in 2018 declined for an eighth day, the longest losing streak in almost seven months, after an official said in an interview today that the budget deficit may triple this year from an earlier estimate. The RBI’s Negotiated Dealing System stalled mid-morning because of technical issues.

The yield on the 8.24 per cent note due April 2018 rose almost 1 basis point to 6.49 per cent at close. The price declined 0.05, or 5 paise per Rs 100 face amount, to 111.95. The government plans to sell Rs 5,000 crore ($1.02 billion) of the 7.46 per cent bonds due 2017 and Rs 2,000 crore of the 6.3 per cent securities due 2023. Trading in all government securities and overnight collateralized borrowing and lending deals stopped at 10:45 am local time, traders said.

Re rises to 3-week high

India’s rupee climbed to a three-week high on speculation overseas investors will buy the nation’s assets as its economy outperforms most other emerging markets.

The Reserve Bank of India forecasts Asia’s third-biggest economy to grow 7 per cent in the year ending March 31, the fastest pace after China among the world’s 20 major economies. The rupee rose to 48.7925 a dollar at the 5 pm close in Mumbai, from 48.81 yesterday. That is the strongest since January 19. The median estimate of analysts is for the rupee to appreciate to 47.90 by the end of the year. Overseas investors have sold Indian shares worth $1.1 billion more than they bought this year.