Bonds, FX markets muted as bank strike hits settlement

India’s bonds and exchange rate markets saw low volumes on Tuesday as a strike by most bank employees to protest bank consolidation and rise in bad loans was expected to hit settlement of trades, dealers said.

About 173 billion rupees ($ 2.70 billion) worth of bonds were traded as of 1112 GMT, compared with an average daily average of 400 billion rupees.

About one million bank employees have called a one-day strike that affected branch transactions including clearing operations, according to a release sent by one of the top trade unions.

“Traders decided to not take heavy positions given that there were not many people in the backoffice for settlement,” said one senior treasury official at a large state-run bank.

“Reporting on forex transactions by branches have also been low.”

The 10-year benchmark bond yield rose to 6.54 percent from 6.51 percent on Monday while the rupee was little changed at 64.1375 to the dollar compared with 64.14.

A state bond auction also saw muted response with a small amount remaining unsold as demand from the traditional state-run banks was low. The Reserve Bank of India raised 182.88 billion rupees, below a targeted 202.88 billion, with the cut-off yields also coming at higher than expected levels.