FX.co ★ India 10Y Yield Rises to 8-Week High

India’s 10-year government bond yield climbed to about 6.85%, its highest level in eight weeks, after hawkish minutes from the RBI’s latest policy meeting boosted expectations of an earlier-than-anticipated rate hike. The move came as traders scaled back bets on a prolonged rate pause following the August 3–5 meeting minutes, which underscored mounting inflation risks.

RBI Deputy Governor Poonam Gupta signaled that there is no room for further policy easing and indicated that conditions for a rate increase could materialize during the current fiscal year. Governor Sanjay Malhotra also cautioned that broader price pressures—from food, fuel, and other input costs—may necessitate a tighter policy stance.

In the bond market, the yield on the benchmark 6.94% 2036 security rose 4 basis points to 6.86%, while five-year yields climbed by as much as 8 basis points. Upward pressure on yields was reinforced by elevated Brent crude prices, trading near $92 per barrel, as stalled US–Iran peace efforts and heightened tensions around the Strait of Hormuz stoked concerns over potential supply disruptions and their inflationary impact.