Bond Prices Decline On RBI Move - Sep 18, 2008

Bond prices opened lower in the morning after the Reserve Bank of India permitted additional borrowing by banks, against their SLR securities, as it is tantamount to lower SLR. But prices increased later on, as the additional liquidity coming into the market was seen as positive. The RBI move effectively means that banks can keep 24 per cent SLR instead of 25 per cent. RBI is perhaps getting banks prepared for lower SLR requirement. About Rs 33,000 crore additional liquidity will come into the market, which is 1 per cent of the net demand and time liabilities of banks, as allowed by RBI. Total traded volumes on the order matching system were at Rs 5,715 crore. The 8.24 per cent-10 year-2018 paper opened at Rs 100.5 and closed at Rs 100.3, against the previous close of Rs 100.97. During day trade it touched a high of Rs 100.74 . The 8.24 per cent-19 year-2027 paper opened at Rs 96.90 and closed at Rs 96.95. During the day it touched a high of Rs 97.6