BE/RBINOTE/45/2020
- The bonds yield has gained in the recent days and PNB Gilts adds that the Central Bank may be trying to increase the attraction of sovereign debt by letter the bonds yield rise. The benchmark 10-year bond yield advanced to 5.97%
- If this being true, then RBI might be trading a delicate balance to answer the prolonged absence from the market which could otherwise raise questions over support for the Government’s record Rs. 12 trillion (USD 160 billion) debt sales this fiscal year.
- Indian bonds offer negative real rates, after an increase in inflation brought on by a supply crunch which is caused otherwise due to the prolonged lockdown.
- It is, therefore, felt that this 6% level interest rise is a psychological mark that the Central Bank might be interested to see in order to ensure that the yields don’t rise over and above.
- Further Losses may deepen if RBI abstains from its open market bond purchases any further.
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