MUMBAI: Government bond yields rose on Friday on the back of rise in the US treasury yields and indications that days of easy liquidity may soon be coming to an end. There is no bond auction this week. The rupee rose for a second straight day on Friday.
The rupee gained 24 paisa to close at 46.96/97 against the dollar amid alternate buying and selling of the US currency. RBI raised SLR by 100 bps to 25%, unwinding a similar cut made last November, keeping all other key policy rates unchanged at its second quarter monetary policy review.
The US Treasuries fell on Thursday as data showed the US economy grew at a faster-than-expected pace in the third quarter, raising hopes of an emergence from the worst recession in 70 years. The domestic unit surged to 46.80 level in initial trade on exporters’ selling dollars. However, its gains were capped by sudden demand for the US currency from oil refiners.
Dealers said continuing weakness in local stocks also had a impact on the rupee. The Indian benchmark Sensex, meanwhile, continued to be bearish for the fifth straight day on Friday and ended down 156.44 points or 0.97% after a sharp rally at the initial stages of the day.
The key index had lost massive 514 points or 5.44% in the past five days. Dealers said decline in local stocks has augmented fears of massive capital outflows.
Source : The Economic Times