Foreign banks bought net The Indian government’s debt of Rs 14,700 crore in July is their biggest purchase since February 2020, according to Reuters. India’s 10-year benchmark bond yield fell 13 basis points in July as bets on aggressive rate hikes from the US Federal Reserve as well as the Reserve Bank of India were significantly eased. At present it was trading at 7.1901%.
Net debt worth sold by foreign banks 40,000 crore between January and June.
reserve Bank of India (reserve Bank of India) Monetary policy decision is due later this week on Friday. Economists polled by Reuters expect rates to rise between 25 basis points and 50 basis points. RBI has increased its repo rate by 90 bps from May to tackle inflation.
Rajni Sinha, Chief Economist, CareEdge, said: “With the softening of several commodity prices, CPI inflation has broadly peaked at current levels and is expected to slide below 6% by Q4FY23. However, domestic inflation is still high. We expect RBI to continue with the front-loading of the rate hike cycle. We expect the repo rate to increase by 50 bps in the upcoming policy and terminal by the end of the financial year. There will be another 50-bps rate hike after the repo rate is taken down to 5.90%.
In July, the 10-year US Treasury yield fell 33 basis points on diminishing odds for a more aggressive Fed rate hike. This has also led to widespread weakness in the US dollar.
Lakshmi Iyer, Chief Investment Officer (Debt) and Head Products, Kotak Mahindra Asset Management Company, said: “Whether or not to hike earlier this year, the key question for policy makers is how much to hike! As far as rates are concerned. As for hikes, US Fed is running a sprint. Most other economies may not have the luxury of running a marathon. We expect RBI to hike MPC benchmark repo rate by 50 bps as CPI rules above RBI’s threshold band Continues to do so. Comments may be neutral/ erroneous as CPI trend is following RBI’s forecast for FY 2023. Key to watch will also be guidance if there is any rate change in future. “
Today’s Indian Rupee It reached a one-month high of 78.49 per dollar.
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