MUMBAI: Indian government bond yields rose on Wednesday after a nine-session slide, tracking a spike in US Treasury yields, with market participants now awaiting the Reserve Bank of India’s monetary policy decision on Friday.
India’s 10-year benchmark bond yield was at 7.2294%, as of 0420 GMT, after rising to 7.2526% in early trade. The yield had dropped 25 basis points in the last nine sessions, closing at 7.1962% on Tuesday.
“Local bonds are reacting to their US counterparts, but still we do not see the benchmark yield crossing 7.25% till Friday’s policy decision and commentary,” a trader with a state-run bank said.
On Tuesday, two US Federal Reserve officials signalled that the central bank remained committed to hiking interest rates to a level that would further curb economic activity, pushing US 10-year yields 14 bps higher.
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The RBI monetary policy committee’s decision is due on Friday, with views on the quantum of rate increase widely split between 25 basis points and 50 basis points, according to a Reuters poll of economists.
Barclays expects the RBI to hike its repo rate by 35 bps on Friday to 5.25%, which could be followed up by two more hikes of 25 bps each in September and December.
The RBI has raised rates by 90 basis points since May.
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