Rupee non-deliverable forwards weakened the most since August on the news of RBI Governor’s sudden resignation.
Volumes in India’s government bonds surged to the highest in more than a year.
The Reserve Bank of India’s commitment for buying more debt is a “delight for markets”.
Rupee was the only emerging-market Asian currency that weakened Monday as Brent prices rallied 6.2 percent to $62.4 per barrel.
The turnaround for the worst-hit emerging markets in Asia started earlier in the month when oil prices plunged.
A de-escalation of the trade war would set the stage for a sustained Asian FX recovery, say fund managers.
Oil’s price collapse is driving India’s sovereign bonds to their best quarter in more than a year.
The Indian rupee rallied for a sixth day, and is set for the longest winning streak in more than a year.
India’s rupee and bonds may come under pressure on concern the government’s attempts to restrict RBI’s freedom.
Cost to lock in borrowing rates for a year has declined from a more than a three-year year high in early October to 7.01 percent.
From a record $426 billion in mid-April, reserves have fallen by $32 billion as the RBI sold dollars to stem losses in rupee.
Hoarding Cash Grows in Popularity as Market Volatility Increases
The RBI appears to have moved away from its hands-off exchange rate strategy as the rupee plumbed fresh lows earlier this month.
A global emerging-market sell-off that’s triggered outflows from Indian bonds and stocks has dragged the rupee to new lows.
India Reserves Fall Most Since 2011 in Signs of RBI Intervention
Yield on the benchmark 10-year bonds dropped almost 10 basis points from Oct. 9 to 7.98 percent on Friday
The worst run of rupee losses in 16 years is set to extend.
Bonds traders were fast to cheer the Reserve Bank of India for keeping rates on hold last Friday. The gains may prove fleeting.
Yield on the benchmark 10-year bond fell 10 basis points to 8.05 percent in Mumbai trading.
Move over taper tantrum.
Foreigners have pulled $8.6 billion from local shares and debt this year, adding to the weakness in the currency.