Bond yield opens marginally up, rupee remains stable at 85 a dollar

bonds, rupee

The yield on government securities opened marginally up on December 23 and the rupee remained stable in early hours of the trade.

Indian bond yields, especially the 10-year benchmark bonds opened at 6.795 percent, as against 6.789 percent at close in the previous trading session. It was trading at 6.774 percent around 10.50am.

The rupee opened at 85.00 against the dollar, as compared to 85.0212 at close in the last session.

Yield on the government securities has fallen around 38 basis points (bps) so far in 2024 on higher demand from foreign investors, insurance companies, and pension funds, despite the Reserve Bank of India keeping the repo rate unchanged at 6.5 percent to fight inflation and maintain stability in growth.

On the other hand, the rupee has been under pressure and touched a record low in last few weeks. This was due to concerns over India's sluggish growth, rising dollar index after the US Federal Reserve anticipated lower rate cuts in 2025, and outflows from local equities.

To support the rupee to depreciate sharply, the Reserve Bank of India (RBI) has been intervening in the spot as well as in the forex market.

This week is expected to be relatively subdued due to the holiday season in key markets like the US and Europe, leading to thin trading volumes and reduced market volatility, said Amit Pabari, managing director of CR Forex Advisors.