By Simran Rede | October 19, 2023

India’s bond yield will rise to 7.50% by December due to the increase in oil prices according to Anuj Tagra, Fund Manager at ICICI Prudential.

Tagra predicted a significant impact on India’s bond market as the global oil market faces continuous volatility. Tagra stated the impact of the rising Israeli–Palestinian conflict on the rise in oil prices.

He also believes that the Fed will likely implement an additional 25 basis points (bps) increase, bringing interest rates to around 6%. “The surging oil prices will depreciate the rupee to 83.50 rupees per dollar by December,” said Tagra.

The global oil market is vulnerable to geopolitical conflicts and the consequences for India’s economy are substantial. As oil prices surge, they contribute to inflationary pressures, urging central banks to respond with tighter interest rates. This, in turn, influences bond yields and overall economic stability.