Reference to Reuters. Mumbai, October 6 – The Indian rupee may strengthen slightly this week as two major initial public offerings (IPOs) attract foreign portfolio inflows. Meanwhile, bond yields may ease because the state borrowing for the October–December quarter turned out lower than expected.
The rupee closed last week at ₹88.77 against the U.S. dollar, slightly weaker than the previous week after touching a record low of ₹88.80 on Tuesday. However, a nearly 0.5 percent fall in the U.S. dollar index helped reduce pressure on the domestic currency.
Market participants believe IPO-related inflows may support the rupee in the short term. Tata Capital launched a ₹1.75 billion share sale on October 6, and LG Electronics India opened its ₹1.3 billion IPO on October 7. These fundraises form part of an estimated $8 billion pipeline for the December quarter.
A trader at a government-owned bank said the rupee’s lasting recovery depends largely on the success of U.S.–India trade negotiations. Economists at HSBC warned that India’s current account deficit could nearly double from current levels, but they noted that India’s large forex reserves would cushion the economy against short-term external shocks.
In the bond market, India’s 10-year benchmark bond yield ended Friday at 6.5114%, almost unchanged from the previous week. Analysts expect a modest fall in yields since state governments plan to borrow ₹2.82 trillion this quarter—less than market expectations. They see the benchmark yield staying between 6.47% and 6.52%.
The Reserve Bank of India (RBI) has maintained a steady policy rate, which has boosted investor sentiment. RBI Governor Sanjay Malhotra said yields still have room to decline and that markets are pricing in a possible 25-basis-point rate cut in December. In 2025, the central bank has already cut rates by 100 basis points, reflecting its pro-growth stance amid moderate inflation.
Upcoming indicators such as India’s September HSBC PMI and U.S. trade data will offer further direction to the rupee and bond markets in the coming days.
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