Rupee slides to a five-month low of 96.7/$, yields rise
The currency opened at 96.4 against the dollar and weakened to 96.8 after RBI Governor Sanjay Malhotra indicated that easing was no longer under consideration amid a higher inflation outlook
The Indian rupee slipped to a five-month low of 96.7 against the US dollar on Wednesday, following the Reserve Bank of India (RBI) signaling a shift to "calibrated tightening" in its monetary policy stance. The currency opened at 96.4 against the dollar but weakened to 96.8 after RBI Governor Sanjay Malhotra's remarks on the declining prospects of further easing amid rising inflation expectations.
By the close of trade, the rupee showed signs of recovery, ending near 96.7 against the greenback. The RBI's move was seen as structurally positive for the rupee, but not enough to halt the immediate depreciation pressure. Kunal Sodhani, Head of Treasury at Shinhan Bank, noted that the market may be seeking stronger liquidity tightening or direct foreign exchange intervention rather than just a rate hike.
The benchmark 10-year government bond yield rose by 5 basis points to 7.24 percent, reflecting the bond market's anticipation of the RBI's decision. Nishchay Nath, Founder and CEO of BondScanner, added that the yield hike was not likely to push yields significantly higher on its own. The Nifty50 closed slightly lower at 22,603.05, while the BSE Sensex dropped around 0.6 percent to 72,638.70, despite the anticipated rate hike.
The Bank Nifty finished around the 55,000 mark, under pressure throughout the session. Vinod Nair, Head of Research at Geojit Investments, suggested that the market's attention would now shift to the September-quarter earnings season for further direction.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
