RBI Intervention Boosts Indian Rupee Amid Rising US Yields

The Indian Rupee has temporarily stabilized against the US Dollar after the Reserve Bank of India (RBI) likely intervened in the market. According to a Reuters report, the RBI sold US Dollars before the local spot market opened on Friday, helping the rupee hold stronger than the key psychological 96-per-dollar level.

However, this strength is short-lived due to the rising US Treasury Yields, which have surged due to elevated energy prices and the Federal Reserve's higher-for-longer interest rate narrative. The MCX Crude Oil contract expiring on October 19 has fallen 2.3% to near Rs. 8,950.

Analysts at MUFG note that India's central bank may need to tighten policy further to prevent inflation pressures from becoming entrenched. They expect a shallow 50bp hike in the second half of FY27, making October's meeting a live one.