India US 10-year yield gap narrows, cutting foreign bond appeal
Business
India's 10-year government bond yield is now just about 2.1-2.3% points higher than the U.S.'s, a gap we haven't seen this narrow in decades.
With India at roughly 6.87% and the US around 4.7%, foreign investors get less extra reward for picking Indian bonds, so they're not as tempted to bring their money in.
RBI FCNR(B) deadline heightens rupee sensitivity
This shift comes right after the RBI's special FCNR(B) dollar inflow support is nearing its end, with the closing date brought forward to August 31, 2026, making the rupee more sensitive to things like US interest rates and global oil prices.
If the rupee weakens, stuff like imported fuel could get pricier, and with less room to lower rates, the RBI has to work harder to keep things steady.