Indian government bond yields continue to be largely steady in early deals on Wednesday as market participants await domestic inflation data as well as the central bank’s debt purchase.
The benchmark 10-year yield was at 6.6953% as of 9:45 a.m. IST, compared with its previous close of 6.6938%.
The Reserve Bank of India will buy 500 billion rupees ($5.73 billion) of government bonds that mature between 2029 and 2039, followed by a debt purchase of a similar quantum on March 18.
The central bank has already bought bonds worth 1 trillion rupees through open market operations (OMOs) over the last two months, with lenders offering debt at higher-than-prevailing yields to book profits and free up space in their treasury portfolios.
“We do not foresee any major change in trend from the banks at today’s OMO,” a trader with a primary dealership said.
Meanwhile, India’s retail inflation data for February is due at 4:00 p.m. IST, with a Reuters poll pegging the reading at 3.98%, down from 4.31% in January.
This may be the first time in six months that the reading eases below the RBI’s target of 4%, boosting bets for a follow-up rate cut in April after the central bank’s reduction in February.
Brokerage Sunidhi Securities expects average retail inflation for this financial year at 4.705 and anticipates it could ease further to 4%-4.2% in the coming fiscal.
India’s inflation report will be followed by U.S. retail inflation data, due after domestic market hours on Wednesday. ($1 = 87.2420 Indian rupees) (Rep
