The cost of Ukraine war: Bond yield climbs; rupee slips 47 paise against

Indian 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 6.81 per cent on Wednesday, the highest since February 9.

Traders said if there are no more debt sales in this fiscal year, yields are likely to trade in a 6.75 per cent to 6.85 per cent range depending on the movement in global crude and the evolving geopolitical situation.

India imports more than two-thirds of its oil requirements and rising crude will push up imported inflation while also widening the country's current account deficit.

The rupee depreciated by 47 paise to close at 75.80 against the US dollar.

Traders said sustained foreign fund outflows and a lacklustre trend in domestic equities also weighed on investor sentiment.

At the interbank foreign exchange market, the rupee opened at 75.78 against the American dollar but later dropped to a low of 75.86. The local unit finally finished at 75.80, down 47 paise from its previous close. On Monday, the rupee had settled at 75.33 against the US dollar. The forex market was closed on Tuesday on account of Mahashivratri.

"Rupee fell in the opening sessions but consolidated in a narrow range as market participants remain cautious following the ongoing geopolitical tension between Russia and Ukraine," said Gaurang Somaiya, Forex and Bullion Analyst, Motilal Oswal Financial Services.