Rupee, govt bonds weaken on muted global risk sentiment; FX hits record

The rupee slipped amid muted global risk appetite and firm US yields, though RBI intervention helped cap losses, while forex reserves hit a new record of $725.7 billion

The rupee weakened on Friday pressured by muted global risk sentiment coupled with strength in the dollar amid firm US treasury yields, said dealers. The domestic unit settled at 90.99 per dollar against the previous close of 90.68 per dollar, down 0.34 per cent.

 

However, likely intervention by the Reserve Bank of India helped cap losses and prevented the currency from breaching the psychologically crucial 91 per dollar mark.

 

The country’s foreign exchange reserves hit a new high of $725.7 billion during the week ended February 13, up 8.6 billion on the back of rise in both foreign currency assets and gold reserves, which rose by $3.5 billion and $4.9 billion respectively. The previous high was during the week ended January 30, 2026 when it hit $724 billion.

 

 

Government bond yields also rose as traders remained cautious for any geo-political development during the weekend. The yield on the benchmark 10-year government bond inched up to settle at 6.72 per cent against the previous close of 6.68 per cent.

 

“There is a lot of caution because of US-Iran tensions, people did not want to take positions in case any development happens during the weekend,” said a dealer at a primary dealership.

 

The local currency opened weaker, tracking offshore losses after the currency slipped past the 91 per dollar-mark in thin holiday trade, dealers said.

 

“In the NDF market, the rupee was trading weaker than its last onshore close of 90.67 per dollar,” said a dealer at a state-owned bank. “The move past the 91 mark, (in NDF market) a key psychological level, happened in a session with thin liquidity because of the local holiday,” he added.

 

Traders said limited market participation amplified the move, with persistent dollar demand and positioning in offshore markets further weighed on the local currency.

 

Expectations that the Federal Reserve will keep policy rates elevated for longer have supported the greenback against emerging market currencies. Rising crude oil prices have also weighed on sentiment.

 

“RBI has kept a tab over the fall in rupee which still looks vulnerable as equities fall, oil prices rise and Iran tensions continue with US stationing ships in the Gulf Region and Iran practicing in the Strait of Hormuz for war,” said Anil Kumar Bhansali, head of Treasury and executive director, Finrex Treasury Advisors LLP.

 

“There are sufficient buyers for the dollar with RBI being the biggest having short dollar positions after selling dollars at 90.75 levels in the past 18 days,” he said.

 

The state of the economy report of the RBI bulletin released on Friday, noted India’s foreign exchange reserves remain adequate, providing cover for goods imports for almost a year and around 96 per cent of the external debt outstanding.

 

“While foreign currency assets continue to have the largest share in India’s foreign exchange reserves, gold’s share has increased as on February 6, 2026 over the December-end level due to valuation effects,” the report said.