(Updates to close)
MUMBAI, Nov 13 (Reuters) - Indian federal bond yields eased
to their lowest in a week on Tuesday, as traders expected cash
surpluses with banks to improve by next week following a pick up
in government spending.
The 10-year federal bond yield <IN079917G=CC> ended at 7.89
percent -- its lowest since Nov. 6, according to Reuters data. It
closed at 7.92 percent on Monday.
Overnight cash rates <INROND=> ended at 7.50-7.75 percent,
off the day's peak of 8.05 percent, but higher than the central
bank's reverse repo rate of 6 percent, where it usually hovers
when cash conditions are comfortable.
"Cash availability should return to normal once the
government spends more money. The fact that call rates have not
touched double-digit numbers is an indication that cash has not
completely dried up," a trader at a foreign bank said.
"The central bank's infusion of cash this week has also
helped sentiment," he added.
Cash surpluses tightened after a 50-basis point increase in
banks' reserve requirements kicked in over the weekend draining
160 billion rupees ($4.1 billion).
The Reserve Bank of India injected funds via its repo window
for the second day in a row after staying away since late
September.
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MARKET SNAPSHOT
Bombay Sensitive Index <.BSESN>
Indian rupee (/$) <INR=IN>
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($1 = 39.4 rupees)
(Reporting by Anurag Joshi; Editing by Mark Williams)
(([email protected]; Tel: +91 22 6636 9038; Reuters
Messaging: [email protected]))
Keywords: MARKETS INDIA MONEY