The RBI limits dollar purchases to boost the rupee while an upcoming debt auction pushes bond yields higher.
The Reserve Bank of India has actively stepped in to defend the domestic currency. Consequently, the rupee strengthened to 92.95 against the dollar. The currency previously closed at 93.20. Market regulators are deploying strategies last seen during the 2022 geopolitical crisis.
The central bank urged state-run oil companies to halt standard dollar purchases. Instead, they must use a special foreign exchange line. Therefore, this credit facility significantly eases immediate pressure on the rupee. These interventions aim to stabilise markets amid global uncertainties.
Meanwhile, government debt markets are experiencing noticeable shifts. The benchmark 10-year bond yield rose to 6.90 per cent. It previously closed at 6.88 per cent. Traders remain cautious ahead of a massive weekly auction.
The government plans to raise Rs 32,000 crore soon. Officials will sell five-year and 40-year bonds to investors. Furthermore, a Rs 30,000 crore debt switch is scheduled for next week. Demand during these events will heavily influence future yield movements.
Experts predict the 10-year yield will fluctuate between 6.84 and 6.92 per cent. Globally, Brent crude continues to trade below $100 per barrel. This stability follows renewed hopes for a US-Iran diplomatic thaw. Moreover, Israel and Lebanon recently signed a 10-day truce.
However, international traders remain strictly on the sidelines. They anticipate potential sudden policy shifts from the United States. Consequently, domestic financial markets remain highly sensitive to both local auctions and global geopolitical developments.
(Source: Money Control)
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