Punjab, Sept. 10 -- The rupee weakened again on Thursday, quoted around 95.4675 against the dollar compared with a previous close of 95.0800. The yield on the 10-year benchmark government bond rose to 6.978 from 6.955.
Two prices, one story
A falling currency and a rising bond yield are not separate events. Both are the market repricing the cost of India importing expensive energy while foreign capital leaves.
The currency moves first because it is the immediate adjustment. The yield follows because a weaker rupee means higher imported inflation, which means the market demands more compensation for lending to the government over ten years.
What a higher yield actually costs
The 10-year yield is the reference rate for a great deal of In...