The Indian rupee declined to a historic low on Monday, breaching the 95 mark against the US dollar, while government bond yields climbed above 7% for the first time since July 2024, reflecting mounting pressure on the country’s financial markets.
The domestic currency weakened to 95.20 per dollar, marking a 0.3% drop during the day. The decline comes amid persistent concerns over elevated crude oil prices and ongoing global economic uncertainty, which continue to impact investor sentiment.
At the same time, the yield on India’s 10-year government bond rose to 7.0121%, up from the previous close of 6.9419%. The rise in yields indicates increased borrowing costs and cautious market outlook.
Market participants noted that recent measures by the Reserve Bank of India (RBI) to limit banks’ foreign exchange positions had limited immediate impact on stabilizing the currency.
Analysts believe the central bank may intervene if volatility intensifies, aiming to prevent a sharp depreciation of the rupee. Such intervention could help maintain financial stability and manage inflationary pressures driven by higher import costs.
The developments come at a time when global crude oil prices remain elevated due to geopolitical tensions, adding further strain on emerging market currencies like the rupee.
Overall, the weakening currency and rising bond yields highlight growing concerns about inflation, capital outflows, and external economic risks facing the Indian economy.
