India’s 10-year bonds rose, snapping a six-day decline, on speculation yields near a seven-week high will attract investors.
Yields jumped yesterday after the central bank lowered the amount of debt banks need to hold to 23 percent of deposits from 24 percent with effect from Aug. 11, the first reduction since 2010. The Reserve Bank of India kept the repurchase rate unchanged at 8 percent at the policy review yesterday while cutting its economic-growth forecast for the year through March 2013 to 6.5 percent from 7.3 percent.
“These are probably good levels to add to holdings,” said Mumbai-based Srinivasa Raghavan, vice president of treasury at Dhanalaxmi Bank Ltd. “Given the concerns over growth, it’s a question of time before interest rates are cut. I expect that to happen within three months.”
The yield on the 8.15 percent notes due June 2022 fell two basis points, or 0.02 percentage point, to 8.23 percent in Mumbai, according to the central bank’s trading system. The rate touched 8.25 percent yesterday, the highest level since the debt was sold on June 11.
One-year interest-rate swaps, or derivative contracts used to guard against fluctuations in funding costs, rose three basis points to 7.76 percent, according to data compiled by Bloomberg.
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