Bonds advance as govt debt supply eases

Ten-year bonds gained for a third day on speculation investors will increase holdings as government debt sales slow through the remainder of the year.

The yield on the benchmark note maturing in 2019 fell to the lowest level in almost three weeks after the Reserve Bank of India (RBI) yesterday kept interest rates at record lows. India has Rs 4.51 lakh crore ($95 billion) of fixed-income securities planned for the fiscal year ending March 2010, and has completed 74 per cent of the borrowing programme, RBI said on October 26. The yield on the 6.9 per cent note due July 2019 fell seven basis points, or 0.07 per centage point, to 7.27 per cent as of the 5:30 pm close in Mumbai. The price rose 0.48, or 48 paise per 100 rupee face amount, to 97.44.

Central bank Governor Duvvuri Subbarao yesterday held the repurchase rate at a record-low 4.75 per cent to help revive growth in Asia’s third-largest economy. The bank raised the statutory liquidity ratio, the proportion of deposits banks must invest in government bonds and other approved securities, to 25 per cent from 24 per cent.

In the derivatives market, 10-year bond futures maturing in December traded at 7.99 per cent, according to the Web site of the National Stock Exchange of India. Contracts due March were at 8.27 per cent.

Re falls to 3-week low as investors seek safer assets 

Rupee fell to a three-week low as stock losses and the dollar’s gain this week against a basket of currencies raised speculation investors are favoring the safety of the greenback over emerging-market assets.

The currency slid the most in more than two months as the MSCI Asia Pacific Index of regional equities lost 1.2 per cent.