The Centre has completed borrowing of Rs 53,219 crore from the market till June 9, amid cautiousness in the bond market due to a slew of negative developments like inflationary pressure and higher current account deficit.
Raising of Rs 53,219 crore till the fortnight ended June 9, is 27.7 per cent of the Rs 1,91,856 crore gross borrowings estimated by the Centre for 2006-07, according to a report of PNB Gilts.
Net borrowings, after redemptions of securities worth Rs 30,329 crore, was at Rs 22,890 crore.
During the fortnight under review, the government borrowed Rs 10,000 crore through re-issuance of the 5 year paper (Rs 4,000 cr) and a new 30-year paper (Rs 6,000 cr).
On the outlook, PNB Gilts said the government securities market continues to be cautious with a negative undertone.
The fortnight was extremely eventful as a lot of announcements saw high volatility in the bond market, forex market and the stock market.
Increase in current account deficit impacted the forex market with rupee depreciating and breaching the psychological level of Rs 46 and touching a low of Rs 46.57.
{{/usCountry}}Increase in current account deficit impacted the forex market with rupee depreciating and breaching the psychological level of Rs 46 and touching a low of Rs 46.57.
{{/usCountry}}The steep depreciation in the currency had its negative impact on the bond and equity market too, it said.
Higher inflationary expectations following increase in petrol and diesel prices by Rs 4 and Rs 2 respectively, also depressed the markets further.
In a surprise move, the RBI responded to these developments by hiking the repo and reverse repo rate by 0.25 per cent to contain inflation.
The hike is expected to have a positive impact on the depreciating rupee, it added.