Rupee Rangebound as RBI Boosts Reserves Amid Iran War Uncertainty

The Indian rupee is expected to remain stable this week, supported by robust capital inflows and sustained interventions from the Reserve Bank of India (RBI). The central bank has garnered nearly $73 billion under measures rolled out in June to strengthen India's balance of payments, helping boost the country's FX reserves.

The RBI's actions have bolstered its ammunition to anchor the currency, which is expected to persist this week. Market participants are cautious due to month-end flows related to derivative maturities and corporate payments, as well as still elevated oil prices due to the ongoing Iran war.

Government bonds are likely to trade in a narrow range, with traders expecting the benchmark yield to move between 6.80% and 6.89%. The 10-year bond yield ended at 6.8495% on Friday, up 9 basis points, after falling an aggregate of 7 basis points in the previous two weeks.