India 10-year bond yield clings to 6.85%; traders eye oil moves amid sanctions threat

Business Recorder reported that Indian government debt showed little movement on Monday, with the benchmark 6.94% 2036 bond yielding 6.8595% at 10:00 a.m. IST against Friday's close of 6.8495%. Traders were watching oil prices while they waited for a forthcoming US statement on fresh Iran sanctions.

Yields had recorded their sharpest weekly increase of this financial year, according to the report. A trader with a primary dealer said the next direction would depend on whether Brent, currently above $92 a barrel, moves toward $90 or $100. Iran condemned the planned US measures while pressing for a diplomatic solution, and President Donald Trump has warned of sanctions against countries that keep trading with Tehran.

Records of the RBI's August rate-setting session, released last week, indicated officials remain open to higher borrowing costs if price pressures spread more widely. Governor Sanjay Malhotra argued that evidence of spillover effects might warrant a tighter policy stance, while Deputy Governor Poonam Gupta added that a rate increase could be justified later this year. Costlier crude could fuel inflation, enlarge the current account shortfall and put more strain on public finances.