{"id":620847,"date":"2026-06-04T13:53:13","date_gmt":"2026-06-04T13:53:13","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/620847\/"},"modified":"2026-06-04T13:53:13","modified_gmt":"2026-06-04T13:53:13","slug":"tax-cut-hopes-lift-indian-bonds-but-rbi-hike-fears-loom","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/620847\/","title":{"rendered":"Tax-cut hopes lift Indian bonds but RBI hike fears loom"},"content":{"rendered":"

Indian government bonds<\/a> edged higher on Thursday, supported by reports that New Delhi may offer tax relief to foreign investors, though compounding currency and inflation risks kept investors wary of a hawkish central bank policy on Friday.<\/p>\n

The benchmark 6.48% 2035 bond yield fell 3 basis points to end at 7.9931%.<\/p>\n

Reuters and \u200clocal media reported \u2060that \u2060the government is considering scrapping the 12.5% capital gains tax<\/a> on overseas investors and the 20% withholding tax on interest earned by foreign investors in government securities.Tax-cut hopes lift Indian bonds but RBI hike fears loom<\/a><\/p>\n

Reuters and \u200clocal media reported \u2060that \u2060the government is considering scrapping the 12.5% capital gains tax on overseas investors and the 20% withholding \u200btax on interest earned by foreign investors in government securities.<\/p>\n

The measures could improve the \u200bappeal of Indian debt ahead of Bloomberg’s June review for inclusion in its Global Aggregate Index.
While about 80% of economists in a Reuters poll expect the RBI \u200bto hold rates on Friday, some traders are \u2060positioning for \u200ca hike to shore up the rupee.
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“The RBI could stay \u200bon hold \u200bthis week, but the risks of a rate hike are \u2060rising,” said Sok Yin Yong, fixed-income analyst, Asia, at Julius \u200bBaer, adding that inflation could climb further from April’s 3.5% \u200bafter multiple fuel price hikes by state-run retailers in May.
Crude prices have risen 35% since the Iran war began in February, intensifying pressure on Indian assets given the country imports about 90% of its oil needs.Over the same period, the rupee has hit record lows and the 10-year bond yield has \u200crisen nearly 35 basis points.<\/p>\n

A rate hike could help preserve India’s yield premium over U.S. Treasuries, draw foreign debt inflows and support the rupee, traders said. Even \u2060with a 25-basis-point increase, the 10-year sovereign yield is unlikely to breach 7.15%, they said. Globally, a ceasefire agreement between Israel and Lebanon boosted hopes for a broader deal to end the U.S.-Israeli war on Iran and eased oil and U.S. Treasury yields<\/a>.<\/p>\n

RATES<\/p>\n

India’s overnight indexed swap rates were mixed as policy concerns weighed.<\/p>\n

The one-year swap was up 1 bp at 6.1150%, and the two-year rate was down 1 bp at 6.33%. The five-year rate was little changed at 6.6275%.<\/p>\n","protected":false},"excerpt":{"rendered":"Indian government bonds edged higher on Thursday, supported by reports that New Delhi may offer tax relief to…\n","protected":false},"author":2,"featured_media":620848,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[84,37621,1294,210808,210811,210810,210809,38912,56,54,55],"class_list":["post-620847","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-capital-gains-tax","tag-economy","tag-indian-government-bonds","tag-inflation-risks-in-india","tag-rbi-rate-hike","tag-tax-relief-for-foreign-investors","tag-u-s-treasury-yields","tag-uk","tag-united-kingdom","tag-unitedkingdom"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/620847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=620847"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/620847\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/620848"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=620847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=620847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=620847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}