Bond trade nervous over tightening liquidity.

(From Business Line)

from BUSINESS LINE, January 01, 2007 Bangalore, Dec. 31 - Bonds remained stable last week, but traders were nervous over the tightening liquidity and fears of further instability in West Asia after the execution of Saddam Hussein

Traders said with the Reserve Bank of India limiting the intervention in the foreign exchange markets, liquidity had turned tightThey said that most of RBI's interventions were taking place only in the forward markets. This was evident from the inverted forward premium, with high rates at the short end and low rates at the long end. Three-day forward premia, cash to spot was 24 per cent, where as three, six and 12 months 4.5 per cent, 3.9 and 3.1 …