Cheaper energy imports and a 1.1% weekly gain in the rupee reduced the necessity for the Reserve Bank of India to maintain elevated yields to defend the currency. Foreign investors responded by purchasing roughly $552 million of domestic sovereign debt, marking their most aggressive buying week since July. Furthermore, overnight indexed swap rates now price in only 50 to 75 basis points of future rate increases, down from around 125 basis points anticipated before the oil selloff.
Key points
Lower energy costs and a stronger currency eased the central bank's pressure to maintain…: Lower energy costs and a stronger currency eased the central bank's pressure to maintain high domestic yields.
Foreign investor participation reached its highest weekly total since July following supp…: Foreign investor participation reached its highest weekly total since July following supportive global yield movements.
Traders sharply reduced their rate hike forecasts from roughly 125 basis points down to 5…: Traders sharply reduced their rate hike forecasts from roughly 125 basis points down to 50 to 75 basis points.
Sources checked by our analysis pipeline: 1
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