Indian bonds hit by rising oil, yields 7.37% to 7.42%
India's government bonds are facing a tough time as rising oil prices push up inflation worries.
The Reserve Bank of India (RBI) is keeping interest rates high to try and control the situation, which means bond yields are expected to climb even more, likely between 7.37% and 7.42%.
"Rising oil prices are a clear headwind for Indian bonds as it will further push the central bank to stay hawkish for a longer period, which will put upward pressure on yields," said a trader at a primary dealership.
India inflation 5.54%, RBI hawkish
Higher energy costs don't just hit your wallet, they can make everything from groceries to gadgets pricier.
Inflation in India already hit 5.54% last month and might cross the RBI's comfort zone soon.
The central bank has signaled it is hawkish, showing it's serious about tackling inflation, but it also means borrowing stays expensive for now.