Indian Bonds Rise on Hints of Policy Easing from RBI

Indian government bonds extended their gains following remarks by Reserve Bank of India (RBI) Governor Sanjay Malhotra, who indicated that recent economic data points to potential room for an interest rate cut.

RBI Governor Hint for Rate Cut

In an interview with Zee Business on Monday evening, Malhotra highlighted that the Monetary Policy Committee (MPC) had already hinted at the possibility of easing policy in its October meeting. Since then, key indicators, including inflation, have not reduced the likelihood of a rate adjustment. He emphasised that the decision ultimately rests with the MPC at its upcoming meeting early next month.

On the currency front, Malhotra described the recent weakness in the rupee as a natural response to the inflation differential with advanced economies. He noted that an annual depreciation of 3%–3.5% is typical, adding that the RBI’s priority is to curb excessive volatility rather than defend a specific exchange rate level.

Also Read: RBI Governor Hints at Scope for Further Rate Cuts as Inflation Drops to Record Low

Drop in Bond Yield

Following his comments, the benchmark 10-year government bond yield fell by four basis points to 6.48%. The rupee, which hit a fresh low against the US dollar last Friday, is Asia’s worst-performing currency this year, having lost roughly 4%.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.