Rupee steadies near record low as RBI moves to curb volatility

Indian government bonds rose and the rupee steadied near a record low on Monday, 24 November, after RBI Governor Sanjay Malhotra signaled that incoming data supports the case for a possible interest-rate cut and traders said the central bank intervened in foreign-exchange markets to slow the rupee’s slide.

The benchmark 10-year yield fell four basis points to 6.48%, while the rupee recovered to about ₹89.15 per US dollar after touching a fresh low of ₹89.48 on Friday.

Malhotra told Zee Business that indicators reviewed since the Monetary Policy Committee’s (MPC’s) October meeting, including inflation readings, “have not diminished” the earlier signal that room exists for policy easing.

He said the final decision rests with the MPC when it meets in early December.

Malhotra described the rupee’s recent weakness as a natural outcome of India’s inflation gap with advanced economies, adding that a 3 to 3.5% annual depreciation is typical for the currency. He reiterated that the RBI’s goal is to minimize excessive volatility rather than defend any specific level.

The rupee has weakened about 4% this year, making it Asia’s worst performer and underscoring concerns about its fragility.

Traders said intervention by the central bank helped contain losses. Reports showed that the RBI sold dollars in both the on-shore spot market and non-deliverable forward segments early on Monday, arresting the currency’s slide before it breached ₹89.50.

One FX advisory firm noted the RBI “may have thought it more prudent to conserve ammunition and intervene at higher levels” rather than defend the previous ₹88.80 floor.

Markets welcomed the intervention, but many analysts remained cautious, noting that without fresh inflows or a US-India trade breakthrough the rupee retains a downward bias.

The combination of the governor’s comments and the central bank’s actions supported risk sentiment in bond and currency markets.

Nevertheless, analysts said the real test lies ahead: whether inflation remains contained, whether foreign capital returns, and how decisively the RBI acts at its December meeting.