Mumbai: The 10-year government bond yield on Friday fell to a near three-month low as declining crude oil prices eased concerns of inflation and fiscal slippage. The rupee strengthened for second sessions against the US dollar. At 9.15am, the 10-year gilt yield stood at 7.781% from its previous close of 7.823%. Bond yields and prices move in opposite directions. The rupee was trading at 73.43 a dollar, up 0.43% from its Thursday’s close of 73.45. The currency opened at 73.15 a dollar and touched a high of 73.13 a dollar.
Bond yield hits 3-month low as crude oil prices ease
“Bond markets were supported by favourable cues in the form of easing oil prices and an appreciating rupee”, said Edelwiss Financial in a note to its investors.
Brent crude oil, which last month surged above $86 a barrel for the first time in nearly four years, now sits at a over two month low just below $73. The international benchmark lost nearly 15.6%, in last one month.
“The Reserve Bank of India’s proactive approach to liquidity management continues to support India’s sovereign bond markets. Favourable external catalysts (easing oil prices and US rates) also boosted bonds”, said Radhika Rao economist at DBS Bank in a 30 October note.
US President Donald Trump and Chinese President Xi Jinping signalled their willingness to talk on trade also improved sentiment.
Benchmark Sensex rose 0.91% or 312.06 points to 34,744.03 points. Year to date, it has rose 2%.
So far this year, the rupee has declined 13.05%, while foreign investors have sold $5.76 billion and $8.46 billion in the equity and debt markets, respectively.
Asian currencies were trading mixed. South Korean won was up 0.98%, Taiwan dollar 0.42%, Indonesian rupiah 0.23% and Malaysian ringgit 0.1%. However, China offshore was down 0.16%, Thai baht 0.14%, Philippines peso 0.11%, China renminbi 0.07%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 96.367, up 0.09% from its previous close of 96.277.