(Bloomberg) -- Indian bonds rallied after the Finance Minister said the economy could do with significant interest-rate cuts and ruled out any rethink over a proposed $10 billion overseas bond sale.
Benchmark 10-year yields dropped nine basis points to 6.43%, after climbing 16 basis points last week. Traders riding Asia’s best bond rally over the past month were caught wrong-footed last week after Reserve Bank of India Governor Shaktikanta Das said future cuts will be data dependent and a report showed Prime Minister Narendra Modi’s office was opposed to the issue of foreign-currency-denominated debt overseas.
Bonds are gaining Monday “on the back of comments from the finance minister that significant rate cuts would be good for the economy,” said Nagaraj Kulkarni, a senior rates strategist at Standard Chartered Plc in Singapore. “The bond market had partially unwound its medium-term rate cut expectations a couple of weeks back. We are seeing the expectations coming back now.”
Significant rate cuts over and above the 75 basis points the Reserve Bank of India has already delivered would do a lot of good for the country, Finance Minister Nirmala Sitharaman told The Economic Times. She also said her office wasn’t reviewing the government’s proposal to issue sovereign debt overseas.
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