Indeed, traders are increasingly worried that high oil prices and a weakening rupee would force the central bank to raise rates sooner rather than later. The yield on the 10-year bond rose two basis points to 8.18 percent on Tuesday.
On the rupee front, there is little respite seen for the currency. The rupee weakened to close at 72.6950 on Tuesday, having hit a record low of 72.7375.
The implied opening from forwards suggests spot may start trading around 72.63 per dollar, although with oil prices rising due to Hurricane Florence, it may come under pressure in later trading.
India releases August consumer price inflation report at 5:30 this evening and which is expected to show price pressures easing. August CPI is estimated at 3.78 percent from a year ago, down from 4.17 percent in July and below the RBI’s medium-term target of 4 percent.
That is mostly due to subdued food prices, but traders are most likely to see through this report as a weaker rupee and a high oil prices sour the outlook.
