Indian bonds wobble on oil strain, RBI swap pullback

Indian government bonds slipped in early trade on Tuesday, Business Recorder reported, as Brent crude climbed above $90 a barrel, a level it had not reached in almost three weeks. Market unease also centred on the Reserve Bank of India's decision to close a zero-cost swap facility a month ahead of schedule. That facility had offered banks cover on foreign-currency deposits from non-resident Indians taken in June.

Yields on the benchmark 2036 paper reached 6.8407% at 10:45 a.m. IST, a 3 basis point increase. That followed a 5 bps jump on Monday, the largest one-day move in more than a month. The five-year note fared worst, its yield climbing 8 basis points on Monday, then a further 3.5 on Tuesday, reaching 6.4680%.

Analysts said the early close followed inflows from the scheme that exceeded $50 billion, while policymakers weighed liquidity effects and funding costs. Traders are now waiting for a 202 billion rupee state debt sale to gauge demand. The 60-day US-Iran ceasefire lapsed on Monday, and neither side has signalled plans to extend it.