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Showing posts from September 2, 2020

RBI intent to check yields, bat for stronger rupee sparks bond market rally

The Reserve Bank of India’s (RBI) resolve to keep bond yields under check and the loud signal emitted in favour of a stronger rupee swiftly translated into rallies in the bond and currency markets on Tuesday. The rupee closed at 72.87 a dollar, up 1.03 per cent from its previous close of 73.62. The 10-year bond yields fell 18 basis points to close at 5.942 per cent from its previous close of 6.117 per cent. While announcing the bond market related measures on Monday post market hours, the central bank had observed that the “recent appreciation of the rupee is working towards containing imported inflationary pressures.” The central bank in the past few sessions had stopped buying dollars and let the rupee appreciate in sync with the daily deluge of capital flows. The statement made the central bank’s intent clear. In the absence of meaningful export growth in a contracting global economy, the RBI was more willing to curb imported inflation through stronger rupee. On a larger theme thou…

GST compensation cess mop-up rises for first time in five months

Goods and services tax (GST) collections slumped to a three-month low in August, and came in 12 per cent lower year-on-year (YoY), indicating slower recovery in economic activity. However, compensation cess collections rose for the first time in five months, and 6 per cent YoY, amid the tussle between the Centre and states. The overall mop-up remained well below the Rs 1-trillion mark for the sixth straight month owing to the pandemic, even as unlocking began in June. GST collections stood at Rs 86,449 crore in August, compared to Rs 87,422 crore in July, according to finance ministry data. It was at 88 per cent of August 2019 collections. A large portion of the fall could be attributed to imports, which were down 23 per cent YoY, while domestic transactions were down just 8 per cent YoY. “During the month, revenues from imports were at 77 per cent and revenues from domestic transactions (including import of services) at 92 per cent of revenues from these sources during the same month…