India’s benchmark bonds completed a fourth weekly gain on speculation debt purchases by the central bank will spur demand.
The Reserve Bank of India bought 112 billion rupees ($2 billion) of sovereign notes at an open-market auction today, according to a statement. Separately, the finance ministry sold 150 billion rupees of securities, part of its 5.69 trillion rupees borrowing program for the 12 months through March 2013.
“The open-market buying of debt is helping keep yields down,” 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 dropped two basis points, or 0.02 percentage point, this week to 8.51 percent in Mumbai, according to the central bank’s trading system. It rose one basis point today.
The central bank has bought 321 billion rupees of notes since March as its dollar sales aimed at stemming the slide in the rupee drained funds from the financial system. The rupee touched a record low of 56.3875 per dollar yesterday.
One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, rose four basis points this week to 8.02 percent, according to data compiled by Bloomberg. The rate is little changed today.
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