Fresh Gulf strikes push Indian bonds down as crude surges
Indian government bonds took a hit on Tuesday after oil prices shot up, thanks to fresh strikes in the Gulf that disrupted shipping through the Strait of Hormuz.
Brent crude jumped 9.6% overnight (the biggest leap in over six years) and climbed further in Asian markets, reaching $84.84 per barrel.
Rupee slips as inflation risk rises
Since India imports 90% of its oil, pricier crude means higher inflation and more risk of interest rate hikes.
The rupee also slipped by 0.54%, landing at 96.14 per dollar as worries grew about government finances and global uncertainty.
Benchmark yield climbs, foreign outflows ₹1.3bn
Bond yields rose close to a three-week high, with the benchmark bond yield up six basis points to 6.7864%.
Foreign investors pulled out 1.3 billion rupees from Indian bonds (the first withdrawal since June's stabilizing measures) while swap rates surged amid talk of possible rate hikes driven by tensions abroad.