FX.co ★ India 10Y Yield Falls on Oil Relief

The yield on India’s 10-year government security hovered around 7%, slipping to its lowest level in more than a week as easing crude oil prices improved market sentiment amid renewed optimism over a potential US–Iran agreement. Brent crude fell below $100 per barrel after President Trump said Washington and Tehran had “largely negotiated” a memorandum of understanding that could eventually lead to the reopening of the Strait of Hormuz.

The decline in oil prices alleviated concerns that the Reserve Bank of India might be forced to launch an aggressive rate-hike cycle as early as next month. Yields faced additional downward pressure as the rupee strengthened, following remarks by Sanjay Malhotra that the RBI would do “whatever is required” to ensure orderly forex market conditions. He also noted that the rupee appears undervalued after depreciating by about 6%.

The governor reiterated that containing inflation remains the RBI’s primary objective. However, he emphasized that the central bank will continue to support economic growth, provided inflation dynamics allow room for further policy flexibility.