After US midterms, oil slump lifts Indian bonds, eases RBI
India's government bonds are on a winning streak, posting their strongest week since 2019.
The big reason? Crude oil prices took a sharp dive after the US midterm elections, which encouraged foreign investors to pour nearly ₹52 billion into Indian bonds.
This rush of investment has made things a bit easier for the Reserve Bank of India (RBI).
Crude's 17% fall eases India's inflation
Since India imports so much oil, the recent 17% drop in crude prices is a huge win: it's helped cool down inflation and ease pressure on government finances.
The rupee even got a boost, rising by 1.1% against the US dollar, so the RBI doesn't have to work as hard to keep the currency stable.
Traders price in softer RBI stance
Falling US Treasury yields have made Indian bonds stand out compared to others in Asia.
With less pressure for aggressive rate hikes from the RBI now, traders are betting on a softer approach ahead: something that wasn't expected before oil prices fell.