India’s benchmark bonds completed a third weekly gain on speculation the central bank’s purchases of sovereign debt will spur demand.
The Reserve Bank of India bought a total 111.3 billion rupees ($2.04 billion) of notes maturing in 2018, 2021, 2022 and 2027 today, according to a statement. The monetary authority has bought a total 209 billion rupees of securities in the fiscal year that began April 1, seeking to boost cash supply in the banking system and help the government’s record borrowing program succeed.
“Liquidity has improved and hopefully the central bank will continue to buy debt,” said Debendra Kumar Dash, a fixed- income trader at Development Credit Bank in Mumbai.
The yield on the 8.79 percent notes due November 2021 fell five basis points, or 0.05 percentage point, this week to 8.53 percent in Mumbai, according to the central bank’s trading system. The rate rose three basis points today.
The finance ministry sold 150 billion rupees of securities due in 2020, 2024, 2030 and 2041 at a separate auction today, part of its record 5.69 trillion rupees borrowing program for the current fiscal year, according to the central bank.
One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, fell eight basis points this week to 7.98 percent, according to data compiled by Bloomberg.
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