RBI shores up rupee after Budget underwhelms bond, equity investors

The rupee appeared on course to open near its all-time low of 91.9875 per dollar, but the RBI's intervention helped shore it up to 91.60, a gain of 0.4 per cent from its closing level on Friday

The Indian central bank's interventions helped boost the rupee away from record low levels on Monday, a ‍day after the announcement ​of the country's federal budget, which left sovereign government bonds reeling and equities on tenterhooks.

The rupee appeared on course to open near its all-time low of 91.9875 per dollar, but the central bank's intervention helped shore it up to 91.60, a gain of 0.4 per cent from its closing level on Friday.

India pushed ​manufacturing to the forefront of its budget but stopped short of the bold reforms sought by investors to boost investment amid rising geopolitical tensions.

Indian stocks fell more than 2 per cent in a special trading session on Sunday while bonds came under pressure after the weekend break.

The yield on the 10-year benchmark bond rose 7 bps to 6.76 per cent on Monday, hovering near its highest level since March 2025. Investor sentiment was hurt by a higher-than-anticipated government borrowing estimate. Additionally, an unexpected rise in the securities transaction tax on equity derivatives hurt equity markets sentiment.

On the day, local stock benchmarks were up about 0.2-0.4 per cent as they regained some lost ground from Sunday.

"We remain negative on the ‌Indian rupee and see it underperforming through ​2026, and we also think India's local currency rates will likely grind higher," said Michael Wan, senior currency analyst at MUFG.

"Taken in totality, the (budget's) changes stuck more to the tried and tested in our view, and as ‍such, is unlikely to change the trend of INR weakening for now."

A risk-off mood in global markets also complicated Indian assets' playing field on ‍Monday ‌as volatility in ​precious metal prices drove stocks lower across the ‍board.

The MSCI's gauge of Asian shares outside of Japan was down nearly 2.5 per cent. ‍Asian ‍currencies were ‌down between 0.1 per cent to 1 per cent as well.