Rupee inches 5 paise higher; bond yield tests 6.9%

The Indian rupee that plunged to a record low on Monday staged a comeback on Tuesday, gaining 5 paisa to close the day at 76.91 against the dollar.
 

Bond yields, on the other hand, remained elevated as crude oil prices hovered around $130 barrel.  The yield on the 10-year government paper may harden further if the Russia-Ukraine tension continues as crude oil prices will also stay elevated.
 

Analyst said the central bank may revise its inflation target for the next financial year due to the sharp rise in crude oil prices in the past 10-12 days after the geopolitical situation worsened.  
 

“Although food prices are likely to remain benign, an increase in retail fuel prices is already overdue given the sharp increase in crude oil prices since January22. A significant pass through will start to have an impact on headline CPI inflation which has already soared to a 7-month high of 6.01 per cent YoY in January 22 partly due to the base factor,” Acute ratings stated.