Rupee and Bonds to Track Oil Prices Amid Middle East Uncertainty
The Indian rupee and government bonds will be influenced by oil prices this week due to Middle East uncertainty. The rupee closed at 95.2075 per dollar on Friday, up about 0.2% from last week. Data released on Friday showed the US economy unexpectedly lost jobs in July, leading traders to scale back Fed rate-hike bets and pull down Treasury yields and the dollar.
Volatility in energy prices has kept traders focused on inflation trends, with both the US and India set to report consumer inflation data this week. A Reuters poll of 40 economists predicts that India's inflation rate will rise to 4.50% in July from 4.38% in June. The Reserve Bank of India had kept policy rates unchanged last week.
Analysts at ANZ expect the central bank to deliver at least two 25-basis-point rate hikes starting December 2026, citing rising inflation expectations and elevated global commodity prices. Bond yields have posted their first fall in five weeks, tracking a decline in oil prices and a dovish tilt to the RBI policy.