2:16 PM
India's benchmark bond yield seen at 7.5%, rupee at 84 by March: UBS
India's benchmark 10-year bond yields are expected to rise on the back of higher government borrowings, while the rupee could see steep depreciation by end of this financial year as pressure on emerging market currencies resurfaces, a rates strategist with UBS told Reuters on Tuesday.
"For the fiscal year end, we are forecasting the 10-year India bond yield at around 7.50%," Rohit Arora, senior emerging markets forex and rates strategist at UBS Global Research said in a telephone interview. "Over the course of next few months, we expect the debt markets' demand-supply misbalances to resurface."
Arora does not see much value in entering the Indian bond market at current levels as a combination of "somewhat elevated supply burden," and a tapering demand form banks fuel a rise in yields.
India's benchmark 7.26% 2032 bond yield was at 7.25%, down 25 basis points over the last one month, as inflation in India and the United States eased, leading to bets of slower pace of interest rate hikes. The rates strategist pegs India's terminal repo rate at 6.50%, with a rate hike at the end of policy meet on Wednesday, as well as in February.