Indian sovereign bonds declined as the Reserve Bank of India’s measures to support the bond market fell short of expectations.
The yield on benchmark 10-year note rose four basis points to 6.11% after climbing to 6.15%, its highest since Aug. 28. Governor Shaktikanta Das refrained from announcing a bond purchase calendar to help the market absorb the government’s massive borrowing plan, though he assured that the central bank’s liquidity stance will continue to be accommodative.
“Going forward the Indian economy is poised to move in only one direction which is upwards. It is our strong conviction backed by forecasts, that in FY22 we will undo the damage that Covid-19 has inflicated the economy. After the chaos and dispair of the year gone by through which we have sailed together, we shall continue to sail ahead.”
A Bloomberg poll of 32 economists showed that five expected a rate cut while the remaining expected a status quo. The repo rate has been cut by 115 basis points since the Covid-19 pandemic hit in March.
