Oct 27 (LiveMint) – Indian rupee jumped sharply against while sovereign bonds also rose after the US currency plunged on speculation that the Federal Reserve may slow the pace of its interest rate hikes. The rupee rose to 82.20 against the US dollar compared to its close on Tuesday of 82.7250 while 10-year bond yields fell to 7.376. The yield fell seven basis points to end at 7.4424% on Tuesday.
The dollar index was at about 109.75, hovering near its lowest level in over a month. The dollar’s decline has been fuelled by wagers that the weakening U.S. economy may prompt the Fed to reassess the size of its rate hikes from next month.
The view that the Fed could begin to pivot in December was reinforced by weak U.S. housing data this week, which showed that home prices and sales declined, adding to the case that the Fed’s attempts to slow down the world’s top economy was working.
US Treasury yields declined with the 10-year yield now at 4.02%, about 30 basis points off its recent highs.
Meanwhile, global oil prices rose, driven by record U.S. crude exports and a weaker dollar. Crude exports rose to 5.1 million barrels a day, the most ever.