Yields on India’s 10-year government securities climbed to about 6.77%, the highest level in five weeks, as investors reassessed the impact of volatile crude oil prices on inflation, growth, and monetary policy. Government bonds fell for a sixth straight session, with markets increasingly pricing in the risk that persistently elevated oil prices could prompt tighter policy conditions.
Brent crude, buffeted by ongoing geopolitical tensions, hovered near $107 per barrel—well above levels viewed as comfortable by policymakers. At the same time, funding pressures in the banking system have pushed lenders toward greater reliance on market borrowing. Weak deposit growth and higher rates on bulk deposits are straining traditional funding channels.
Among the banks turning to capital markets is Indian Bank, which plans to raise more than $500 million through seven-year infrastructure bonds. Meanwhile, the rupee slipped past 93 per US dollar to a new low, reflecting mounting concerns about a widening current account deficit and persistent global risk aversion.
