The yield on India’s 10-year government security hovered near 7%, easing from a one-month high as investors returned to sovereign bonds after four consecutive sessions of declines. Market sentiment strengthened after authorities raised import duties on gold and silver to 15% from 6% in a move aimed at curbing overseas purchases, supporting the rupee, and helping to contain the current-account deficit. The deficit is projected to widen to 2.5% of GDP in fiscal 2027, driven in part by the US–Iran energy shock.
However, the rally in government bonds was capped by persistent inflation worries amid elevated global crude prices. Brent crude remained above $106 per barrel, reflecting ongoing tensions between the US and Iran and heightening fears of prolonged supply disruptions through the Strait of Hormuz. Meanwhile, India’s overnight index swap rates were broadly stable after their sharp rise in recent sessions.
