Interest rates
RateView : CRISIL's outlook on near-term rates
July 2020
Quiet June
Government security (G-sec) yields closed June up 10 basis points (bps) on-month after holding largely steady amid stress related to the Covid-19 pandemic, weak economic activity, cautious investment decisions, and increase in crude oil prices.
The 10-year benchmark changed from 6.45% GS 2029 to 5.79% GS 2030. Yield on the new benchmark opened June at 5.81%, reached 5.79% mid-month, and closed at 5.88% – up 10 bps from the close of 5.78% in May and within CRISIL’s forecast range of 5.80-6.05%.
The Reserve Bank of India (RBI) was scheduled to borrow Rs 1.5 lakh crore in the month, but managed only Rs 1.2 lakh crore (Rs 1.32 lakh crore including green shoe option).
Towards the end of the month, yields edged up slowly as supply of G-secs increased and volatile crude oil prices swayed from $42.03/barrel at the beginning to $41.15/barrel at month-end, up from $35.33/barrel in May. This led to the benchmark yield closing the month at 5.88%.
Analytica