The Indian rupee fell past the past $70-mark on Thursday to hit an over
The 10-year bond yield closed at 7.45% compared with 7.425% at
“Market seems to be suddenly worried about the deterioration in India’s macroeconomic conditions, especially with global crude prices reaching ‘danger’ levels from India’s current account deficit/balance of payment perspective”, said Kotak Institutional Equities in a 24 April note. “We have been highlighting India’s structural and cyclical macroeconomic challenges, which the new government will have to overcome to accelerate India’s GDP growth.”
Analysts believe that are less chances of the Reserve Bank of India (RBI) cutting rates in the next meeting due to higher crude oil prices amid concern over slower economic growth. Recently released RBI minutes suggest that the focus of the members of the Monetary Policy Committee has shifted from low food inflation to increased upside risks, particularly after a rise in crude oil prices and uncertainty about monsoon rainfall.
“We believe that the likelihood is now in favour of a cautious wait-and-watch June policy meeting, although we think it could be a close call. We are shifting the timing of the next 25 basis points rate cut to August (versus June) with a 45% probability that the cut gets delivered in June and 55% probability of an August cut. Exit food deflation, enter core”, said Sonal Varma Chief India Economist, Nomura in an 18 April report.