0547 GMT [Dow Jones] Indian government bonds slump after the central
bank springs an unpleasant surprise on markets with no cut in interest
rates. The new benchmark 8.15% 2022 bond is at INR100.16 vs INR100.52
before the rate decision. The old benchmark 8.79% 2021 bond trades at
INR102.40 vs INR102.89 before. A Dow Jones poll had tipped the RBI to
cut its main lending rate by 25 basis points to prop up faltering
domestic growth. The rate action doesn't shift from its earlier
guidance that room for rate cuts was limited as inflation remains
uncomfortably high. The RBI warned that reduction in the policy rate
could exacerbate inflationary pressures. "Traders who went long on
bonds in the run-up to the policy are scampering to cut losses because
the RBI said the role of interest rates in growth slowdown is
relatively small," a state-run bank trader says. The 2022 bond yield
is tipped to stay in a 8.12%-8.17% band Monday vs 8.13% last quoted.
(khushita.vasant@dowjones.com)
Contact us in Singapore. 65 64154 140; MarketTalk@dowjones.com
(END) Dow Jones Newswires
June 18, 2012 01:47 ET (05:47 GMT)
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