Fixed Income yields keep falling off a cliff while liquidity is managed with the year long rally in yields chopped
below 9% even as emergency liquidity’s few dollars keep bonds from staying east of the channel corridor mandated by RBI with the marginal lending facility currently at 9% for banks.
The drop in yields could not however encourage RBI to force rate cuts sooner as these yields remain in a thinly traded market and neither borrowing costs nor lending rates for retail or wholesale tranches are nearly being effected apart from Treaasury gains ahead of March 31
RBI has been allowing the use of excess SLR for the MLF (MSF) emergency window since the last 3-4 weeks leading to the unwitting capital appreciation in bonds since November.
Related articles
- India to face its worst financial crisis in decades as rupee hits Rockbottom? (currentindiaaffairs.wordpress.com)
- RBI allows FIIs to invest up to $25 billion in infrastructure bonds – More incentives on pipeline (buzzonindia.wordpress.com)
- National Manufacturing Policy / Zones (awardz.wordpress.com)
- Banking on a limited interest rate channel (awardz.wordpress.com)
- RBI approves extension of AI loan tenures (thehindu.com)
- No hike in interest rates in RBI credit policy (ibnlive.in.com)

Discussion
Trackbacks/Pingbacks
Pingback: India Bond Impact ( Fixed Income) : RBI sticks to CRR, likely no cuts in CRR, SLR « A blog of blogs - January 11, 2012
Pingback: India Bond Impact ( Fixed Income) : RBI sticks to CRR, likely no cuts in CRR, SLR « A blog of blogs - January 11, 2012
Pingback: India Bond Impact(Fixed Income report): No Please don’t cut rates, RBI « A blog of blogs - January 23, 2012
Pingback: Fixed Income Report(Feb 20, 2012): Bond yields scarily poised or just rangebound (India bond Impact) « A blog of blogs - February 20, 2012
Pingback: Budget Impact (Fixed Income Report) – Hold your horses on the report Card « A blog of blogs - March 19, 2012
Pingback: Fixed Income Report: India back as flavor of the year « A blog of blogs - April 9, 2012
Pingback: Fixed Income Report: Credit Policy tuesday likely unsatisfactory « A blog of blogs - April 13, 2012