India' shorter-tenor bond yields surged after the central bank announced it would close the special dollar deposit window for overseas residents a month earlier than scheduled. The decision was made to align the window’s closure with market conditions and manage currency exposure.

The early closure signals the RBI's intent to tighten monetary policy and curb excess foreign currency inflows that could strain the exchange rate. Investors reacted by shifting portfolios toward higher-yielding instruments, boosting demand for shorter‑tenor bonds.

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Overall, the move underscores the central bank’s proactive stance in managing currency and interest rate dynamics, reflecting a shift in policy to maintain macroeconomic stability.