Bond yields fall nearly 10 bps as crude slides, rupee gains against dollar | Economy & Policy News

Bond yields fell sharply on Monday, tracking a steep decline in crude oil prices, while the rupee extended its gains for a second consecutive session. The US dollar, meanwhile, weakened ahead of the US midterm elections scheduled for November 3.

The yields on the benchmark 10-year government bond fell nearly 10 basis points (bps) on Monday, marking its sharpest decline in seven months.

The 10-year bond yields have declined 17 bps from their four-year high of 7.48 per cent recorded on October 26, 2026. They have risen 95 bps over the past year and 90 bps so far in the current calendar year.

“Bond yields have come down mainly because of two reasons. One is the fall in crude oil prices and the other reason might be short covering. Few positions might have been covered here,” a dealer with a public sector bank said.

“If the levels of 7.30 break, the entire short will be covered pushing the yields towards 7.25 levels. There will be more clarity on yield direction post the results on US mid-term elections,” the dealer added.

Brent crude futures slid over 7 per cent to $108.46 per barrel amid hopes of a deal to end the US-Iran conflict.

The January 2027 Brent contract had settled at approximately $113.43 on Friday before declining 3.9 per cent to $109, following reports of continued diplomatic engagement between the US and Iran that eased some immediate concerns about further escalation. 

The rupee, which opened at 94.89 against the dollar — compared with the previous close of 94.96 — strengthened to 94.70 during the day before giving up some gains to settle at 94.90.

“The Indian rupee appreciated, supported by lower crude oil prices and positive risk-on market sentiment. A softer greenback ahead of the US midterm elections also provided a tailwind for the domestic currency. However, persistent geopolitical worries encouraged bargain buyers to step in at lower levels,” said Dilip Parmar, research analyst at HDFC Securities.

The Indian unit has gained almost 1 per cent since October, following regulatory measures aimed at curbing speculative bets. In 2026, the rupee has depreciated 5.3 per cent against the dollar.