By:- Murthy Nagarajan, Head – Fixed Income, Tata Asset Management,
“Rate hike in US was expected due to higher CPI inflation reading. Federal Reserve new governor walsh reiterating the Fed members stance is positive and led to a strengthening dollar. In the Indian context, market is driven by FII flows into debt due to expectation of higher yield in the Indian markets and expected currency appreciation due to Dollar inflows. This hawkish statement should have effected the bond markets, but due to expected dollar inflows, this should not have much impact on Indian bond yields.”