Indian government bonds faced selling pressure in early Monday trading, tracking a broader selloff in US Treasuries as escalating US-Iran tensions weighed on emerging market assets.
The benchmark 6.94% 2036 bond yield rose to 6.7340%, reflecting the dual headwinds of rising oil prices and higher US Treasury yields.
The move underscores the vulnerability of Indian fixed income to external shocks.
As crude prices climb on supply fears linked to the Strait of Hormuz, the cost of imports rises, pressuring the current account and complicating the Reserve Bank of India's inflation outlook.
Simultaneously, the selloff in US Treasuries has pushed global yields higher, prompting investors to reassess the risk premium on emerging market debt.
This development follows a period of heightened volatility in Indian markets.