By Dharamraj Dhutia
MUMBAI, April 3 (Reuters) - Indian government bond
yields opened higher in the first session of the new financial
year, tracking a spike in oil prices, while the government's
borrowing plans for April-September weighed on sentiment.
The 10-year benchmark 7.26% 2032 bond yield was at 7.3419% as of 10:00 a.m. IST on Monday, after closing at
7.3180% on Friday. The yield fell 14 basis points in March, but
ended fiscal 2023 higher, registering a rise of 48 bps.
"Bond yields should continue to see some upward pressure
this week, as oil has moved higher, and debt supply will also
begin," a trader with a state-run bank said.
Oil prices jumped on Monday following a surprise
announcement by the Organization of the Petroleum Exporting
Countries and their allies including Russia, known as OPEC+, to
cut production to support market stability.
The group, which was expected to maintain its earlier
decision to cut output by 2 million bpd until December,
announced the additional cut of about 1.16 million bpd on
Sunday.
This brings the total volume of cuts by OPEC+ to 3.66
million bpd, according to Reuters calculations, equal to 3.7% of
global demand.
Benchmark Brent crude futures rose to $86.44 per barrel
earlier in the day, their highest level in nearly four weeks.
Elevated oil prices could impact India's inflation
trajectory, as it is one of the largest imports of the
commodity.
India's retail inflation stayed above the Reserve Bank of
India's upper tolerance range for the most part of the last
financial year.
The RBI will raise the interest rate by 25 bps and then pause
for the rest of the year, according to a Reuters poll of
economists, who said the central bank would still maintain its
tightening stance. The RBI's policy decision is due Thursday.
Sentiment also weighed as the government plans to borrow
8.88 trillion rupees ($107.75 billion) - slightly above
expectations - via bonds in April-September, which could steepen
the yield curve.
($1 = 82.4100 Indian rupees)
(Reporting by Dharamraj Dhutia; Editing by Sohini Goswami)
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