RBI eased grip on bond and rupee in 2021, managing multiple objectives

Bonds would rally in both instances, and therefore, it could turn out to be a good year for Indian bonds

The Indian rupee and the 10-year bond prices closed weaker in 2021 from the start of the year but it was a tightly controlled and calibrated slide, as the Reserve Bank of India (RBI) intervened in both asset classes for a softer landing.

The rupee closed at 74.338 a dollar, down from its December 31, 2020, level of 73.065. The 10-year bond yield closed at 6.454 per cent, a relatively steep rise from its start of the year level of 5.865 per cent. Bond prices and yield move in opposite directions.

The year 2021 was difficult for India and the RBI, as