Indian bond yields hit their highest level in nearly 18 months, while the rupee fell to its lowest level since July 2020, as a sharp rise in global oil prices raised concerns about its impact on domestic inflation.
India imports 80% of its oil needs and higher prices result in increased import inflation. “The rally in crude oil continues and till we see some relief, rupee and bonds will remain under pressure. It needs to be seen whether RBI comes to protect the rupee or not,” said a senior dealer of a private bank. The rupee closed at 75.36 per dollar after touching 75.39 in the day.
Oil prices rose 2%, extending multi-week gains, as the energy crisis gripping major economies showed no signs of easing amid a pick-up in economic activity and supply curbs from major producers.
India’s benchmark 10-year bond yield closed at a session high of 6.34%, the highest level since April 17, 2020.
.