Rupee slips, bond yield jumps to 4-month high on hawkish Fed signals

So far in 2023, the yield on the 10-year bond has jumped 12 basis points (bps)

Sovereign bonds and the rupee weakened on Wednesday after Federal Reserve Chair Jerome Powell outlined a more aggressive path for US rate hikes than was previously expected, leading to concerns about capital outflows from emerging markets like India.

While dollar sales by exporters towards the end of the financial year helped the rupee claw back some losses, the yield on the 10-year government bond touched its highest intra-day level since November 4, 2022, as US debt yields surged. Bond prices and yields move inversely.

The rupee settled at 82.06 per US dollar versus 81.92 at the previous close. Intra-day, the domestic currency