On Thursday, the US government announced some of the biggest tariffs since trade became free. This decision surprised many, especially Indian banks, which are usually affected by changes like this. Tariffs are basically taxes on goods coming from other countries, and they can make things more expensive for consumers in the US.
Experts think these new tariffs will raise prices in the US, making inflation go up and possibly causing interest rates to rise as well. Countries like the EU and China are facing even steeper tariffs, with rates above 20%. India, on the other hand, will see tariffs higher than 26%.
Yet, despite these big changes, something interesting happened: the US Treasury bond yields, which are important for determining the cost of borrowing money, actually fell by more than 3% to just over 4.05%. This drop is good news because it can help lower costs for Indian banks and other sectors.
For context, in the last year, US bond yields have dropped by nearly 7%, and Thursday’s drop was significant, as it was the lowest rate since early October. This might be beneficial for Indian lenders, who are anticipating a monetary policy decision on April 9, which could see interest rates staying the same or even dropping.
Also helping the Indian financial sector is a decrease in the US dollar index, which measures the strength of the dollar against other currencies. It fell to 102.4 and has dropped almost 6% since the start of the year. This could attract more investments to emerging markets, which may boost risk assets and help countries like India.
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