RBI refuses to budge on bond rates, rupee strengthens to 6-month high

Central bank seems to have briefly withdrawn from intervening in spot currency markets, even as it continued with its forwards markets intervention

The Reserve Bank of India (RBI) on Friday sold very little of the benchmark 10-year bond at the rates asked for, making it clear that it would not let market rates rise beyond its comfort zone.

At the same time, the central bank seems to have briefly withdrawn from intervening in the spot currency markets, letting the rupee appreciate to a nearly six-month high, even as it continued with its forwards markets intervention.

An appreciating rupee theoretically makes import cheaper, and therefore controls inflation. It is considered an indirect method of raising interest rates without touching policy rates, which remain