Brief
Rupee climbs 1% as RBI unveils new FX measures, bond yields near 7.4%
The RBI's weekend measures sparked a rupee rally and a sell‑off in government bonds, pushing yields to near‑7.4%.
By Felo News Desk · Published
The rupee on Monday logged its best single‑day gain since April 2, rallying 96 paise, or more than 1%, to close at 95.75 per U.S. dollar after the Reserve Bank of India (RBI) announced a suite of measures over the weekend to curb foreign‑exchange volatility.
What happened
In early trade the rupee opened 91 paise higher at 95.80 against the dollar. The RBI’s steps included a dedicated dollar window for oil‑marketing companies through designated banks and higher costs for certain foreign‑exchange hedging transactions, aimed at reducing spot‑market dollar demand and curbing speculative positions. While the currency gained, the benchmark 10‑year government bond yield rose to between 7.36% and 7.38%, up about 7 basis points from the previous close of 7.2995% on Friday, reaching its highest level since March 2023.
What the reports add
The article notes that the 10‑year yield has risen roughly 45 basis points over the past seven weeks, reflecting elevated crude‑oil prices and uncertainty over the interest‑rate outlook. It also cites historical peaks: the yield touched 7.46% in late February–early March 2023 and traded in the 7.37‑7.44% range in November 2022 during previous RBI rate‑hike cycles.
What was said
Forex traders said the RBI’s measures could provide near‑term support to the rupee by easing spot‑market dollar demand and curbing excessive speculative positions. American brokerage Citi noted in a note that while the steps would give immediate support, the rupee would remain under pressure beyond the initial impact. French brokerage Societe Generale said the rupee’s trajectory would continue to be shaped by crude‑oil prices, foreign‑portfolio flows and the broader direction of the dollar.
How it came about
The RBI’s weekend announcement follows a period of sustained pressure on the rupee, which has been down over 6.5% this year after losing more than 7.5% from its April 2 peak. Elevated Brent crude prices above $105 a barrel, hawkish central‑bank policies and heavy upcoming debt supply have added to risk aversion in the fixed‑income market.
Key facts
- The rupee closed at 95.75 per dollar, up 96 paise (over 1%) (newindianexpress.com)
- The 10‑year government bond yield rose to 7.36‑7.38%, its highest since March 2023 (newindianexpress.com)
- The RBI introduced a dedicated dollar window for oil‑marketing companies and higher hedging costs (newindianexpress.com)
- Citi said the measures would give immediate rupee support but pressure would remain (newindianexpress.com)
Sources
- [1] newindianexpress.com — originally reported as “Rupee logs best day since April 2 on RBI measures; bond yields near 7. 4%, highest since March 2023”
