Yield on the benchmark 10-year bonds dropped almost 10 basis points from Oct. 9 to 7.98 percent on Friday
The worst run of rupee losses in 16 years is set to extend.
Bonds traders were fast to cheer the Reserve Bank of India for keeping rates on hold last Friday. The gains may prove fleeting.
Yield on the benchmark 10-year bond fell 10 basis points to 8.05 percent in Mumbai trading.
Move over taper tantrum.
Foreigners have pulled $8.6 billion from local shares and debt this year, adding to the weakness in the currency.
Oil prices, weaker rupee and higher rates are weighing heavily on Indian bonds.
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The rupee declined 1.5% in the two days to Tuesday as measures announced by the government were insufficient to curb declines.
The measures will probably include steps to curb the decline in the rupee and oil prices, a government official told reporters.
India’s trade widening deficit and Fed rate hike to affect rupee, says DBS.
A mini-revival of foreign inflows into Indian bonds spluttered in the first week of September.
India’s current-account gap widened in the June quarter to $15.8 billion, hurt by higher payments for oil.
Traders in India’s battered bond market would do well to take any potential easing in inflation with more than a pinch of salt.
The yield move has been swifter than most analysts anticipated.
India’s rupee, Asia’s worst-performing currency this year, has slumped so much recently that a little respite may be in store.
Funds plowed $403 million into rupee-denominated bonds, nearly four times the mark achieved in July.
The Reserve Bank of India appears to have turned less aggressive in defending the rupee amid emerging-market selldown.
Emerging Asian bonds, currencies have had trouble this year and investors in the region are bracing for more in the near-term.