FX.co ★ India 10Y Yield Steady as RBI Sale Looms

The yield on India’s 10-year government security hovered around 7.0%, trading in a narrow band as lower oil prices provided some support, while the RBI’s liquidity-draining bond sale, elevated US Treasury yields, and firmer rate-hike expectations limited further declines. Brent crude fell 2.3% to about $101.50 a barrel, easing inflation concerns, though traders noted that a sustained break below $100 would likely be necessary for the 10-year yield to move significantly lower toward 7%.

At the same time, the RBI is set to sell INR 250 billion of bonds through an open market operation—its second such sale in a series of steps aimed at withdrawing excess liquidity from the banking system. Expectations of a 25-basis-point RBI rate increase on October 7 have also intensified following the Federal Reserve’s recent move, while the US 10-year Treasury yield remained close to 5% after the Fed signalled the possibility of another hike before year-end.