Yields Clipped, Reserves Dip, Rupee Rear-Up Continues

Yields on gilts ended the week about 20 basis points lower in choppy trades owing to uncertainties pertaining to the duration of the Iraq war and the sudden tightness in liquidity situation. The corporate bonds market remained lacklustre and yields dropped marginally.

The Reserve Bank of India (RBI) governor Bimal Jalan on Friday on the sidelines of a function told the reporters that the government borrowing programme next fiscal year is manageable and there is no pressure on liquidity.

His words had a soothing effect on the market, which has been reeling under tight liquidity over the last fortnight on account of advance tax outflows and sudden credit pick up.

 

The market has by and large discounted the impact of the Iraq War. However, there are worries on the fronts of inflation and oil price.