Monsoon seen normal this year, IMD says; bonds cut losses
Last year, in April IMD had forecasted above normal monsoon this year, of 106% of the long period average with a model error of 5%.
Indian Meteorological Department (IMD) on Tuesday released its prediction for this year's monsoon and said that it is set to be normal. It said that monsoon rainfall may be 96% of the normal with an error margin of 5% on either side.
IMD further said that there are more than 50% chance of El-Nino developing from August.
"Above normal" monsoon is between 104-110% of the LPA and anything beyond 110% is considered "excess".
Government bonds, that had slipped before the announcement rose after IMD gave its prediction.
Bloomberg reported that India's 6.97% 2026 government bonds were trading at 6.85% afer IMD's announcement as against 6.89% earlier in the day. "There seems to be some selling ahead of the IMD forecast,” said Harish Agarwal, fixed-income trader at FirstRand to Bloomberg.
Monsoon predictions are considered to be very vital for Indian economy as agriculture still largely is dependent on the weather phenomenon.
On March 27, Skymet Weather, a private sector weather forecaster had said that it expects India's monsoons for 2017 to be below normal.
It said, "Monsoon 2017 is likely to remain below normal at 95% (with an error margin of +/-5%) of the long period average (LPA) of 887 mm for the four-month period from June to September." This means with the less agriculture output due to "below monsoon" will shoot up the food prices.
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Last year, in April IMD had forecasted above normal monsoon this year, of 106% of the long period average with a model error of 5%.
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