MUMBAI: Indian government bond yields inched up in early deals on Monday as rising global trade tensions weakened the rupee and pushed stocks lower.
The benchmark 10-year bond yield was at 6.4882% as of 10:30 a.m. IST, compared with its previous close of 6.4630%.
The yield dropped 12 basis points (bps) last week, its biggest weekly decline since January 2024.
The uncertainty around the rupee and a sell-off in the equity market is pushing yields higher, a trader with a state-run bank said.
The Indian rupee fell 0.4% to 85.59 per US dollar, tracking a weaker Chinese yuan.
The benchmark BSE Sensex was down 3.5%, while the broader NSE Nifty 50 declined 3.9%, due to growing fears of a global recession due to the escalating trade war.
That has all but guaranteed that the Reserve Bank of India will lower interest rates at its policy decision on Wednesday, the trader added.
Some investors are also anticipating a change in the central bank’s stance on monetary policy, while bets on the quantum of rate cuts this year have risen from 50 bps to 75 bps.
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The odds of further US rate cuts have also increased, which has impacted US bond yields.
The two-year yield fell more than 20 bps to its lowest since September 2022.
Since the start of this year, the RBI has infused over 5.2 trillion rupees ($60.73 billion) into the banking system through debt purchases and foreign exchange swaps.
It is also set to buy bonds worth 600 billion rupees in April.
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