FX.co ★ India 10Y Yield Falls to 1-Month Low

The yield on India’s 10-year government security hovered around 6.9%, close to a one-month low, as investors continued to weigh the impact of the Reserve Bank of India’s supportive policy measures announced last week. Although the RBI kept both its policy rate and stance unchanged, it introduced steps to encourage greater foreign participation in government securities and attract long-term capital inflows.

However, the downward pressure on yields was partly offset by a sharp rise in global crude oil prices. Brent crude climbed 4.5% toward $97 per barrel after renewed hostilities in the Middle East, including Israeli air strikes in Lebanon that broke a recent truce and dampened expectations of a broader de-escalation in the US–Iran standoff.

Despite these external headwinds, Indian bonds remained underpinned by the RBI’s latest initiatives, which spurred a rally across the yield curve last week. Long-term yields slipped by 2–3 basis points, while short-term yields fell by more than 10 basis points.