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Bonds Fall on Government's Fiscal Deficit Target

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Bonds Fall on Government's Fiscal Deficit Target

Mumbai: Indian bonds and the rupee fell in early trading on Monday after the government set a higher-than-expected fiscal deficit target for the 2015/16 year as part of the federal budget unveiled on Saturday.

The Budget announced a fiscal deficit target of 3.9 per cent of gross domestic product for the fiscal year starting in April, higher than an expected 3.6 per cent.

The government also said it would cut the deficit to 3 per cent of GDP by the 2017/18 fiscal year, one year later than expected.

The benchmark 10-year bond yield rose 3 basis points to 7.75 per cent initially, and was trading up 1 bps at 7.73 per cent from its Friday close by 09:21 am.

The rupee weakened slightly to 61.86 per dollar compared to its 61.83/84 close on Friday, tracking Asian peers after China's central bank cut interest rates on Saturday.
 

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