Pressure on rupee continues in Samvat 2082; 10-year bond yields harden

The rupee depreciated 6.37 per cent against the dollar in Samvat 2082 amid FPI outflows and global uncertainty, while the benchmark 10-year bond yield rose 69 basis points

The rupee weakened 6.37 per cent against the dollar during Samvat 2082, while the 10-year government bond yield rose 69 basis points.

Aathira Varier Mumbai

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The rupee remained under pressure during Samvat 2082, depreciating by 6.37 per cent against the dollar, as global uncertainties, foreign portfolio investor (FPI) outflows and a widening trade deficit weighed on the domestic currency. The Indian unit fell 4.4 per cent against the dollar in the previous Samvat.

The imposition of US reciprocal tariffs on Indian goods, uncertainty over trade negotiations, a stronger dollar and persistent foreign capital outflows affected investor sentiment. The escalation of geopolitical tensions in West Asia since late February further weakened the rupee, as higher crude oil prices raised concerns over India's import bill and current account deficit.

The domestic currency touched an all-time low of 96.96 per dollar in May 2026 amid elevated crude prices, weak capital flows and dollar strength.

"The Samvat gone by has been volatile for the markets with global disturbances largely guiding stocks, currency and bonds. Never before have we seen such close linkages reflecting high power of globalization. Stocks were generally down with investors preferring other countries as Indian markets witnessed more FPI outflows than inflows. The rupee was under relentless pressure with FPIs being negative, trade bill widening and dollar strengthening," said Madan Sabnavis, chief economist, Bank of Baroda.

To contain excessive volatility, the Reserve Bank of India (RBI) intervened in the foreign exchange market. In June, it also introduced a special dollar-rupee swap facility to attract fresh Foreign Currency Non-Resident (Bank) deposits and support the domestic currency.

The rupee recovered towards the end of Samvat 2082, closing at 93.91 per dollar on November 6, its strongest level since April 22. However, it remained 6.37 per cent weaker than at the beginning of the period, when it stood at 87.9325.

VRC Reddy, head of treasury, Karur Vysya Bank, said, “The outgoing Samvat was challenging for Indian markets, marked by geopolitical tensions, elevated crude, global yield pressures and FPI outflows. Bond yields remained volatile, peaked at 7.50 per cent, while the rupee faced persistent depreciation pressure, marked all time high of 96.96.”

Meanwhile, the government bond market witnessed a rise in yields, with global bond movements, domestic inflation concerns and expectations of tighter monetary policy weighing on sentiment.

The benchmark 10-year government bond yield rose 69 basis points to 7.19 per cent on November 6 from 6.50 per cent at the beginning of the period.

Yields were influenced by movements in US Treasury yields, actions by the RBI and the US Federal Reserve, and domestic liquidity conditions. Expectations of higher global interest rates, foreign investor outflows and concerns over government borrowing also added to the pressure.

While RBI rate cuts and liquidity infusion measures initially supported the debt market, concerns over inflation and rising crude prices limited gains. The West Asia conflict towards the latter part of the year further fuelled imported inflation concerns.

In October, the RBI raised the policy repo rate by 25 basis points to 5.50 per cent and shifted its stance to calibrated tightening, signalling a change in the interest rate outlook.

The 10-year yield subsequently touched 7.48 per cent on October 26 before easing to 7.19 per cent by November 6, as softer crude oil prices and declining global yields improved market sentiment.