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MUMBAI, Oct 16 (Reuters) - Indian federal bond yields edged
higher on Tuesday as crude prices sprinted to a record, sparking
inflation concerns and as investors braced for fresh bond
supplies this week.
Crude oil <CLc1> hit an all-time high of $87.97 a barrel on
tight supplies, strong demand and signs that Turkey could launch
an attack on Kurdish separatists in Iraq. See [O/R].
The 10-year bond yield <IN079917G=CC> ended at 7.91 percent,
compared with Monday's close of 7.90 percent.
"With oil prices hitting record highs every day, that was the
main issue. But liquidity is still good and there was not too
much of selling," a dealer with a private sector bank said.
Still, dealers do not expect retail fuel prices to be
increased before elections to the state legislatures of Gujarat
and Himachal Pradesh were over by the end of December.
India buys more than two-thirds of its oil, making it the
largest component at 30 percent of all imports.
Any increase in state-set prices on diesel and petrol could
push up prices across the board.
India had last revised fuel prices in February, when it cut
prices for the second time in three months. Inflation hit a
two-year peak of 6.69 percent in January.
Annual inflation was at 3.23 percent in mid-September, its
lowest since December 2002, and was at 3.26 percent at the end of
last month.
The central bank will auction 60 billion rupees ($1.5
billion) of treasury bills on Wednesday and 100 billion rupees of
special intervention bonds the following day.
Traders said the supplies could reduce surplus cash, but
intervention by the central bank to cap the rupee's <INR=IN>
gains would add liquidity.
The central bank accepted bids totalling 342 billion rupees
at its reverse repo auction on Tuesday.
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MARKET SNAPSHOT
Bombay Sensitive Index <.BSESN>
Indian rupee (/$) <INR=IN>
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($1 = 39.3 rupees)
((Reporting by V. Ramakrishnan, editing by Ranjit Gangadharan;
Reuters Messaging:
[email protected]; +91 22 6636
9039))
Keywords: MARKETS INDIA MONEY