India’s benchmark 10-year yield falls the most in a day in nearly 20 months
MUMBAI:
India’s benchmark 10-year bond yield saw its biggest single-day drop in nearly 20 months on Monday amid falling crude oil prices and as global risk-on sentiment lifted. push investors to buy their short positions.
The rupee fell to a month-and-a-half low, tracking declines in domestic markets and other Asian countries on fears that Beijing could join Shanghai in a COVID-19 lockdown strictly, affecting Chinese stocks and the yuan.
India’s benchmark 10-year yield closed at 7.04 percent, down 13 basis points on the day, its biggest one-day drop since September 1, 2020.
“Global oil prices are falling, there’s a risk-on mode globally, so people are buying bonds. There are some who are targeting 6.90% for the 10-year term in the near term.” said a senior trader at a private bank.
Oil fell to a two-week low, extending last week’s decline, on growing concerns that the prolonged COVID-19 lockdown in Shanghai and potentially rising US interest rates will weigh on economic growth. global economy and oil demand.
India’s domestic market share increased by more than 1% compared to other Asian countries.
The partially convertible rupee ended at 76.69/70 per dollar, compared with its close of 76.4825 on Friday. The unit fell to a low of 76.77 a dollar, the lowest since March 9.
“The RBI has so far acted as an effective backer for the rupee, but we suspect that in high-risk situations it is more likely to turn to a strategy of containing rupee volatility than protect specific levels of the rupee,” HDFC Bank said in a research note.
“The RBI may want to let market forces play to some extent, to get the rupee closer to its fair value, rather than going against the wind too strongly.”
Investors are closely monitoring inflation to see how soon the Reserve Bank of India is likely to start raising interest rates.
Almost all members of India’s monetary policy committee argued in favor of curbing inflationary pressures at the April 6-8 meeting despite continued risks to economic growth. economic, minutes released after market hours on Friday showed.
“Overall, we feel that the tone expressed in the minutes is not as hawkish as the post-policy conference comments suggested and could perhaps be interpreted as the MPC not yet signaling a new cycle.” positive rate hike,” said Rahul Bajoria, Head of India. economist at Barclays.
“However, as the minutes were drawn up prior to the March CPI data, they may not fully capture the most current response function,” he added.
