Bond yields rise amid soaring oil prices1 min read . Updated: 22 Apr 2019, 11:12 AM IST
- Brent prices surged as much as 3.2% to 74.31 a barrel, the highest since October 31
- Oil prices also weighed on other asset classes like stocks
The rupee weakened to the lowest level in more than a month and bonds fell as a jump in oil prices once again exposed the nation’s vulnerability to spikes in energy costs. The currency slid as much as 0.8% to 69.8775 per dollar, the lowest level since March 11, while the yield on most-traded bonds due in 2028 surged six basis points to 7.62%. The S&P BSE Sensex index of equities lost 0.6%.
“The surge in oil prices is the primary reason that is weighing on all asset classes," said Harish Agarwal, Mumbai-based trader at FirstRand Bank Ltd. Elevated crude prices widen the country’s current-account deficit and stoke inflation, which muddies the outlook on interest rates, he said.
Brent prices surged as much as 3.2% to 74.31 a barrel, the highest since October 31, as the US government was said to eliminate sanction waivers that allowed buyers to import Iranian crude. Iran is India’s third-biggest oil supplier and any sanctions can bump up the import bill significantly for a country that relies on overseas purchases to meet about 80% of its energy requirement.