India?s 10-year bond yields fall to two-week low

The yields on India's 10-year bonds fell to its lowest level in two weeks due to perception that the country's central bank might increase cut interest rates for reversing the economic slowdown in the Indian economy.

The rates fell 17 basis points in December, which is the highest fall since May 2010. The Reserve Bank of India (RBI) has increased its key benchmark interest rates 13 times since March 2010 in order to control inflation in the country. The RBI governor D Subbarao has already indicated that the central bank is considering a reversal of the monetary policy as the inflation is falling and the high interest rates have affected economic growth in the country.

According to analysts, the investors are expecting a reversal in the cycle of interest rate changes and this is affecting yields of the Indian bonds. The yield on the 8.79 percent notes due November 2021 fell six basis points to 8.33 percent in Mumbai today morning at the time of reporting. The rate is its lowest since 20 December and had fallen 19 basis points yesterday, according to the data from the central bank's trading system. Yields on government bonds have fallen from its three-year high level to three-month low levels in the October-December period.

Source: http://www.topnews.in/india-s-10year-bond-yields-fall-twoweek-low-2350310

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