MUMBAI: Indian federal bond yields may edge up on Thursday, tracking weaker US Treasuries and in anticipation of fresh moves by the central bank to tighten the availability of cash in the banking system.
Bids accepted at the daily reverse repo auction, a measure of excess cash in the banking system, rose to Rs 535 billion ($13.5 billion) on Wednesday, the highest in two months.
The 10-year bond yield ended at 7.88 per cent on Wednesday, lower than Monday's close of 7.90 per cent. It hit a three-week high of 7.91 per cent last week. Markets were shut on Tuesday for a national holiday.
Finance Minister Palaniappan Chidambaram said on Wednesday the government would review the issue limit for special intervention bonds if asked by the central bank.
The current limit is Rs 1.5 trillion and the cap has to be reviewed if outstanding issues exceed Rs 1.35 trillion. The bonds can be used to remove funds added to the money market by the central bank's currency intervention.
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