10-year Bond Yield Jumps to 15-month High, Rupee Weakens against US Dollar

India’s 10-year bond yield on Tuesday gained for the sixth consecutive session to hit a 15-month high as traders were concerned on fiscal slippages after government’s goods and services tax (GST) collection dropped nearly 10% from a month ago. The Indian rupee, meanwhile, was trading marginally lower against the US dollar tracking losses in the Asian currencies market.

GST collection in October fell to Rs83,346 crore from over Rs92,000 crore in September, as taxes on most commodities have come down. The total GST collection till 27 November is Rs83,346 crore for October and 50.1 lakh returns have been filed for the month, a finance ministry statement said.

At 9.15am, the 10-year bond yield was at 7.073%, a level last seen on 6 September 2016, compared to its previous close of 7.056%. Bond yields and prices move in opposite directions.

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In the last six sessions, bond yield increased nearly 17 basis points amid concerns of higher inflation due to continued rise in crude oil prices that boosted speculations the Reserve Bank of India (RBI) may not cut rates anytime soon.

On Monday, the Reserve Bank of India said that the government will repurchase up to Rs30,000 crore of debt on 29 November to prematurely redeem some stock by utilizing surplus cash balances.

Traders are cautious ahead of the gross domestic product (GDP) data for the third quarter due on 30 November. According to Bloomberg analysts’ estimates, gross value added (GVA) will be at 6.3% from 5.6% a quarter ago, while GDP will be at 6.5% from 5.7% last quarter.

The Indian rupee was trading at 64.56 a dollar, down 0.08% from its Monday’s close of 64.50. The rupee opened at 64.49 a dollar.

So far this year, the rupee has gained 5.31%, while foreign institutional investors have bought $8.36 billion and $22.62 billion in equity and debt, respectively.

Asian currencies were trading lower. China offshore spot was down 0.14%, Japanese yen 0.14%, South Korean won 0.12%, China renminbi 0.12%, Indonesian rupiah 0.11%, Malaysian ringgit 0.09% and Singapore dollar fell 0.07%.

The benchmark Sensex rose 0.16%, or 54.10 points, to 33,778.54. So far this year, it has gained 26.66%.

The dollar index, which measures the US currency’s strength against major currencies, was trading at 92.917, up 0.03%, from its previous close of 92.904.