T-Bills Yield Rises Over 150 Bps Post-RBI Starts Increasing Repo Rate

MUMBAI: The yield on treasury bills across maturities have risen sharply by more than 150 basis points after the Reserve Bank of India (RBI) started raising repo rate and expectations of more rate hike in the coming policies to tame inflation.

The yield on 91-day treasury bills rose by 1.5997 per cent to 5.6287 per cent, on 182-day yield rose by 1.6674 per cent to 6.0999 per cent, and 364-day yield rose by 1.5027 per cent to 6.3378 per cent.

Before the first rate hike by the central bank this year on May 4, yield on 91-day T-Bill was at 4.0290 per cent, 182-day was at 4.4325 per cent, and 364-day on 4.8351 per cent.

"Yields in T-Bill have risen in proportion with hike in the policy rates by 140 bps plus the market is still expecting some more hike which is based on the inflation trajectory. See that smaller hikes may be expected in this month end policy but it's more data dependent," said Ajay Manglunia, Managing Director and Head Fixed Income at JM Financial.

In the August monetary policy review meeting, the RBI had raised repo rate by 50 basis points. It was the third straight rate hike by the central bank ever since it has started increasing the rates this year.

Central bank began rate hike in May by 40 basis points, which was followed by 50 basis points rate hikes each in June and August. (IANS)

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