After touching a 19-month high above 8%, the benchmark 10-year G-Sec bond yield softened to 7.89% (down by 13bps) at the end of the week. Softening of yields was a result of Standard & Poor’s raising India’s ratings outlook to ‘stable’ from ‘negative’.
Five state governments announced auction of their 10-year SDLs for an aggregate amount of Rs.28.8bn on March 23, 2010.
India’s WPI inflation accelerated to 9.89% in Feb ‘10 from 8.56% in Jan ‘10. However, food inflation eased to 16.3% for the week ended March 6 vis-à-vis 17.81% in the previous week on the back of declining prices of pulses and vegetables.
RBI raised the repo rate under the LAF by 25bps to 5% and the reverse repo rate by 25bps to 3.5% with immediate effect.
The Bank of Japan announced doubling of its fixed-rate operations to boost long-term liquidity to US$222bn, and to maintain its uncollateralized overnight interest rate at 0.1%.
US current-account deficit widened to US$115.6bn in Q4FY09, up by 12.9% qoq. This was mainly due to imports of oil, autos and other foreign products outpaced the gains in U.S. exports.