(Reuters) - Indian state-run banks are likely to turn more cautious in their government bond purchases amid rising yields, but will continue to increase their exposure at a more gradual pace, treasury officials said.
"There was space in trading portfolios of state-run banks as they had booked huge profits for two months and with change in yield direction, there is replacement happening," a treasury head of a state-run bank said told Reuters.
Bond yields started rising after the Reserve Bank of India's (RBI) June monetary policy decision pushed out hopes of a rate cut to February, with many participants expecting one only next financial year.
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