India's 10-year benchmark bond yield rose 7 basis points to 6.94% on Friday, signaling concerns over inflation and potential monetary tightening. High Brent crude prices above $100 per barrel, driven by the West Asia conflict, have intensified fears, compounded by the rupee falling below 94 to the dollar.
India's 10-year benchmark bond yield climbed 7 basis points to 6.94% on Friday from the previous close of 6.87%, up 26 basis points over the past month. Bond prices and yields move inversely—rising prices lead to falling yields, and vice versa.
The surge comes amid fears fueled by Brent crude prices exceeding $100 per barrel due to the ongoing West Asia conflict, rattling global markets. The rupee's depreciation below 94 to the dollar has added pressure on fiscal and external balances.
In comparison, the US benchmark yield rose 48 basis points to 4.42% in the last month. Japan's five-year yield hit a record 1.770%, and the 10-year reached 2.300%.
The Reserve Bank of India (RBI) held its repo rate steady at 5.25% in the February 2026 policy review, raising the GDP forecast to 7.4% from 7.3% and CPI inflation projection to 2.1% from 2%. It is expected to maintain rates in April. The US Federal Reserve kept rates at 3.50%-3.75% on March 18.
The government cut excise duties on petrol and diesel by 10 rupees on Friday to mitigate rising crude impacts. Phanisekhar Ponangi of Mavenark said, "Inflation is expected to rise on a low base of previous quarters on the back of expensive raw materials which may compel the RBI to start increasing rates sooner than the market’s expectations."
He added that the RBI would address inflationary pressures proactively to avoid a wage-price spiral. Analysts warn yields could surpass 7% if oil prices climb further.
