HDFC sees stable bonds in tough year for traders

Bloomberg

India’s largest private lender is expecting a calmer year for bond yields in 2023, which will make it harder for traders to prosper after global volatility seen last year.
With the end of the rate-hike cycle near, there should be much more stability in yields, with large volatility likely behind us and the amplitude of future swings much smaller, according to Ashish Parthasarthy, treasurer at HDFC Bank Ltd., the country’s biggest private bank by market value. Parthasarthy sees a steady rupee, trading somewhere around 81- to 83.5-per dollar level over next two-three months.
The Indian currency was around 81.25 per dollar on Monday.
“It’s not going to be easy to make money,” Parthasarthy said in an interview. “At different points in time, there will be opportunities — you have to be much more in touch with the market, much more alert to take the opportunity as and when it comes about.”
Comments from Parthasarthy, who was previously the bank’s head of trading, come as bets increase that the Fed is almost done hiking rates thanks to softer economic data, despite the hawkishness of policy makers. In India, fault lines in views are also appearing, with the latest central bank policy meeting minutes showing external board members warning against excessive tightening even as the Governor says the battle against inflation is not over.

“Since the world is moving toward more stability in interest rates, that should reflect ranged stability in currencies also for most of the year, which should be the case for India,” as well, he said.