Auction Devolved On To Dealers Again

Friday's auctions were poorly received, the RBI devolved INR 99.75b of the benchmark 5.85% 2030 bond on primary dealers. Elsewhere there were reports that the RBI, which also announced late on Friday it was currently holding record forex reserves of more than $600bn, is exploring the possibility of investing in top rated foreign corporate bonds to generate higher yields. An approval of the plan will mark a shift from RBI's current strategy of investing only in gold and sovereign debt. In its annual report for fiscal 2021, RBI said it will "continue to explore new asset classes, new jurisdictions/markets for deployment of foreign currency assets (FCA) for portfolio diversification and, in the process, tap advice from external experts, if required".

• Markets await wholesale price and CPI data later in the session.CPI is seen hovering above the 5% mark for the third out of five months this year and above the central point of the RBI's 2%-6% band. Monetary policy makers ignored the acceleration and earlier this month retained an accommodative stance for as long as needed to restore growth on a durable basis.
• As a reminder the RBI announced it will buy INR 400b rupees of bonds under its final GSAP 1.0 operations on June 17, including INR 100b of state debt.
• Eligible issues:
  • 6.97% 2026, 6.79% 2027, 7.17% 2028, 7.59% 2029, 5.85% 2030 and 6.64% 2035