“The current USD cycle has likely peaked. The US Federal Reserve may be on track to deliver further rate hikes, but markets are now reassessing how high the fed funds rate will go, considering the sharp tightening in financial conditions.”
The Indian rupee snapped its four-day losing streak to close 29 paise higher against the US dollar on Tuesday, tracking a recovery in domestic equities and weakness in American currency overseas.
Indian bond traders will look forward to a Rs 26,000 crore ($3.5 billion) Treasury-bill sale on Wednesday. Trading volumes may be muted ahead of the central bank’s monetary policy review on Thursday.
Indian government bonds and the rupee are likely to come under pressure after the Fed opened the door to more and faster-than-anticipated rate hikes.
Indian bonds may extend losses as higher crude oil prices and U.S. Treasury yields weigh on sentiment. The rupee may also open lower amid worries over the impact of elevated commodity prices on the nation’s fiscal health. 10-year yields rose 6bps to 6.64% on Monday USD/INR rose 0.1% to 74.2425 on Monday Global funds sold net Rs 855 crore of …