Rupee Nears Record Low; RBI Rejects Bond Bids

The Indian rupee hovered around 88.76–88.79 per dollar on Monday, with state-run banks seen selling dollars—likely on the Reserve Bank of India’s behalf—to prevent a breach of the 88.80 level. Strong dollar momentum, sustained importer hedging and a hawkish U.S. Fed outlook kept the currency under pressure and left markets debating whether the RBI will continue defending the level. The RBI’s rejection of bids for 110 billion rupees of the 6.28% 2032 bond briefly spurred a rally in government bonds, but the effect faded amid a weak rupee, liquidity squeeze and demand-supply imbalances. The 10-year benchmark yield was about 6.54% (previous close ~6.5317%) and traders expect it to trade roughly in a 6.50%–6.60% band absent further RBI support; short-term OIS and swap rates were largely steady. Market attention remains on upcoming Fed comments and whether the RBI will continue active dollar sales and liquidity measures to contain further rupee depreciation and rising yields.