Bonds, rupee fall tracking jump in oil; more losses likely

MUMBAI: Bond yields edged higher while the rupee weakened on Wednesday, tracking a sharp rise in global crude oil prices that threatens to push up domestic inflation and widen the country’s current account deficit.
Oil prices rose as sanctions on Russian banks following Moscow’s invasion of Ukraine hampered trade finance for crude shipments and some traders opted to avoid Russian supplies in an already tight market.
The benchmark 10-year bond yield edged up to 6.80%, up 3 basis points from its previous close on Monday. It touched 6.81% in early trade, the highest since Feb. 9. Markets were closed on Tuesday for a local holiday.
Traders said if there are no more debt sales in this fiscal year, yields are likely to trade in a 6.75% to 6.85% range depending on the movement in global crude and the evolving geopolitical situation.