The development comes after the collapse of Silicon Valley Bank, which raised bets that the Fed may pause its rate hike cycle.
The two-year yield, which is a closer indicator of interest rate expectations, dropped to 3.72%, its lowest since September on Wednesday, while the 10-year yield fell to 3.39%.
The moves come ahead of the Fed's policy decision, due on Wednesday. Fed funds futures are now pricing in a 65% chance for a 25 basis point (bps) hike in March and 35% for rates being left unchanged. Falling oil prices will also aid sentiment as India is one of the largest importers of crude and prices have an impact on inflation. India's retail inflation was at 6.44% in February, above the central bank's target for the second consecutive month, which increased bets of another rate hike in April. However, traders said that a pause by the Fed could lead to similar action by the Reserve Bank of India.
Meanwhile, the Indian government's borrowing for
April-September is likely to be between 55% and 58% of its gross
borrowing target for the next fiscal, according to two
government officials.
India aims to raise 15.43 trillion rupees through the sale
of bonds in the next financial year.
(Reporting by Dharamraj Dhutia
Editing by Sonia Cheema)
