Indian government bonds drifted lower early on Friday ahead ​of a heavy debt sale, while firm oil prices ‌kept inflation risks elevated, even after US President Donald ​Trump said the Iran war could ⁠end soon.

India’s benchmark 6.48 per cent 2035 bond yield was at 6.9056 per cent as of 11:45 a.m. IST. It settled at 6.8884 per cent on Thursday. ‌Bond yields move inversely to prices.

New Delhi will sell 320 billion rupees ($3.44 billion) ‌worth of 5-year and 40-year notes later in ‌the ⁠day.

“Demand and risk appetite in the weekly ⁠auction will decide the direction of yields,” a private bank trader said.

Meanwhile, Trump expressed confidence that an agreement could soon be reached ​to end the war ‌following a 10-day truce that went in to effect between Lebanon and Israel.

Still, benchmark Brent crude futures hovered near $100 a barrel as the Straight of ‌Hormuz continued to be shuttered, choking off roughly one-fifth ​of the world’s oil supply.

Higher oil prices threaten to cloud import-dependent India’s inflation and ⁠growth outlook.

Rising US Treasury yields also weighed on Indian bonds. The US 10-year yield edged higher for a ‌third day at 4.3193 per cent during Asian hours.

Separately, India’s central bank has urged state-run oil refiners to curb spot dollar purchases and tap a special credit line for their foreign exchange needs, Reuters reported.

The rupee was up 0.6 per cent at 92.66 per US dollar. A ‌stronger currency supports Indian bonds by easing inflation risks, reducing pressure ​on the central bank to keep rates elevated, and improving the appeal of debt for ⁠foreign investors.

RATES

India’s overnight index swap rates surged, with a ⁠paying bias as US and domestic yields rose.

The one-year OIS rate was steady at 5.80 per cent on ‌Thursday, while the two-year swap rate was at 6.02 per cent. The liquid five-year rate rose 5 bps to ​6.42 per cent. ($1 = 92.9860 Indian rupees)

Published on April 17, 2026