MUMBAI (Reuters) - Indian rupee and bonds rose in early trade on Tuesday after the outcome from a central bank board meeting late Monday removed uncertainty over a growing rift over policy decisions between the government and the Reserve Bank of India (RBI).
The RBI's announcement to buy bonds via open market operation to ease tight cash conditions added to the upbeat mood, traders said.
The Indian rupee rose to as much as 71.36 to the dollar, its highest since Sept. 4 from its previous close of 71.65 while the benchmark 10-year bond yield fell to 7.76 percent from Monday's close of 7.79 percent.
The RBI board advised it to act to support small businesses and give banks more time to step up capital norms, following weeks of pressure from Prime Minister Narendra Modi's government to spur lending ahead of elections.
(Reporting by Suvashree Dey Choudhury; Editing by Gopakumar Warrier)
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