Foreign investors turned buyers of Indian bonds last week, ending a seven-week selloff.
| Photo Credit:
ABC Vector
Indian government bond yields rose in early deals on Monday as cautious investors pared positions over concerns of rising oil prices after the US attacked Iran’s nuclear facilities over the weekend.
The yield on the benchmark 10-year bond was at 6.3297 per cent as of 10:05 a.m. IST, compared with its previous close of 6.3087 per cent
“It is best to stay light on positions right now,” a trader with a private bank said. “These are uncertain times and we have to wait and watch.”
US President Donald Trump said late on Saturday that the country had struck Iran’s main nuclear sites, aligning with an Israeli offensive, which has further escalated tensions in the Middle East.
Brent crude oil futures were around $78.50 per barrel in Asian hours on Monday, up 2 per cent from the previous close. The prices breached $80 per barrel earlier in the session, hitting a five-month high.
Oil is a major component of India’s import bill and surging prices put pressure on the Indian rupee and government bonds.
Iran is also weighing retaliation against the US for striking its nuclear sites, according to a Reuters report.
The country vowed to defend itself on Sunday, a day after the US joined Israel in the biggest Western military action against the country since its 1979 Islamic Revolution.
The flare-up comes weeks after the Reserve Bank of India reduced its inflation forecast for this year to 3.7 per cent and cut its key lending rate by a steeper-than-expected 50 basis points earlier this month to assure stakeholders about focus on economic growth and aid in faster transmission, according to the central bank’s June policy minutes.
Meanwhile, foreign investors turned buyers of Indian bonds last week, ending a seven-week selloff.
Indian overnight index swap (OIS) rates were little changed across tenors amid shallow volumes.
The one-year OIS rate and the two-year OIS rate were not traded yet, while the most liquid five-year rate was steady at 5.75 per cent
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Published on June 23, 2025