The benchmark 10-year bond yield had ended at 6.8957% on Friday (June 12), down 7 basis points for the week and marking its third consecutive weekly decline. Traders expect the yield to move in the 6.85%-6.95% range this week, with oil prices and the US Federal Reserve’s policy decision remaining key drivers.
Investor sentiment improved after US President Donald Trump and Iran’s deputy foreign minister said they had agreed to halt the conflict and reopen the Strait of Hormuz, easing concerns over global energy supplies. Brent crude fell sharply, reducing pressure on oil-importing economies such as India.
The improved risk sentiment also boosted the rupee, which appreciated by 43 paise to open at 94.68 against the US dollar on Monday (June 15), its strongest level since May 8.
Indian bonds also drew support from the Reserve Bank of India’s recent measures to attract dollar inflows, including detailed guidelines on hedging benefits for banks raising non-resident deposits and state-run companies seeking overseas funding.
Foreign investors have stepped up purchases of Indian debt following the RBI’s policy measures. Overseas investors bought a net ₹155.5 billion worth of bonds in the six trading sessions beginning June 5, exceeding their cumulative purchases of ₹155 billion recorded up to June 4.
Market participants will also track the US Federal Reserve’s policy decision this week for signals on the future interest-rate path and its implications for global capital flows.
–With Reuters inputs
