FX.co ★ India 10Y Yield Eases as Oil Prices Retreat

The yield on India’s 10-year government security (G-Sec) eased to around 6.68% from the previous session, as a sharp decline in crude oil prices bolstered demand for sovereign debt. Brent crude fell after US President Donald Trump indicated that the conflict in the Middle East involving Iran could be resolved soon, reducing concerns over prolonged supply disruptions and inflationary pressures for India, one of the world’s largest crude importers. The drop in energy prices improved overall sentiment toward Indian assets, and the rupee also appreciated. Additional support came from the Reserve Bank of India, which has been conducting open market purchases of government bonds to help stabilize the debt market. However, further declines in yields were capped as traders remained cautious ahead of a sizable supply of state government paper, with Indian states set to raise roughly INR 460 billion through bond issuances.