RBI steps pull down bond yields
Bond yields fell sharply and the rupee rallied 73 paise to breach the 73-mark against the dollar on Tuesday after the Reserve Bank of India (RBI) announced liquidity-boosting measures.
Yields on the benchmark 10-year security fell below the 6 per cent level to end at 5.94 per cent — a rise of around 18 basis points over the previous close. Bond yields are inversely related to prices.
At the inter-bank forex market, the domestic currency opened at 73.18 against the dollar and moved between 72.75 and 73.19. It finally finished at 72.87, up 73 paise from its previous close of 73.60.
A weak greenback overseas and a positive trend in the equity markets supported the local currency, forex traders said. The dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.25 per cent lower at 91.91.
The BSE Sensex closed 272.51 points, or 0.71 per cent, higher at 38900.80. The NSE Nifty advanced 0.73 per cent to settle at 11470.25. Foreign portfolio investors made net investments of Rs 486 crore.