The rupee is expected to weaken unless the RBI intervenes
The rupee and Government Securities (G-Secs) markets on Monday felt the impact of rising crude oil prices amid the ongoing West Asia conflict, which entered the tenthday. The rupee closed at a record low and G-Sec yields rose, but pulled back half the losses.
The Indian currency ended the day at an all-time low of 92.33 per US dollar, down 59 paise against previous close of 91.74. The central bank is understood to have intervened in the market, selling dollars through state-owned banks to smoothen the volatility in the domestic currency.
K Arvind, Executive Vice-President (Head – Treasury), noted that the geopolitical and geoeconomic impact of the war in West Asia and its impact on energy prices are still unfolding and highly uncertain. The rupee is expected to weaken unless the RBI intervenes.
He said the RBI is believed to have intervened at every level — 92.20, 92.30 — to break the rupee’s fall, ensuring that the domestic currency moves in an orderly manner against the dollar.
Arvind observed that the rupee is under pressure as exporter payments are not materialising, dollar outflows on account of FPI selling in domestic equity markets continuing and the dollar strengthening against all major currencies.
G-Sec yields rise
Yields of G-Secs rose as market players factored in the inflationary effect of high crude oil prices and a depreciating rupee. However, yields softened due to the RBI accepting aggressive cut-offs at the OMO purchase auction of G-Secs (for infusing ₹50,000 crore liquidity into the banking system).
The yield of the benchmark 10-year G-Sec (6.48 per cent GS 2035), which touched an intraday high of 6.76 per cent, closed at 6.72 per cent, up 3 basis points over the previous close of 6.69 per cent.
Venkatakrishnan Srinivasan, Founder & Managing Partner, Rockfort Fincap LLP, observed that the benchmark 10-year G-sec came under pressure in the morning session, with the yield going up to around 6.76 per cent, largely reacting to global risk cues.
“Brent crude had spiked sharply to about $114 per barrel in the morning hours, which triggered concerns around imported inflation and the currency coming under pressure. The rupee has weakened further, leading to some early selling in government bonds,” he said.
However, yields pulled back later in the day and the benchmark G-Sec closed around 6.72 per cent, supported by the outcome of the RBI’s OMO purchase auction.
Venkatakrishnan said the RBI bought a sizeable amount of 6.33 per cent GS 2035 at a cut-off yield of 6.5533 per cent, which was significantly below prevailing market levels, signalling the central bank’s intent to keep long-end yields under check.
“This has also strengthened market expectations that the current benchmark 10-year G-Sec could be included in the next OMO purchase, which helped cap the rise in yields,” he said.
At the same time, Brent crude oil prices eased from their intraday peak, providing additional support to the bond market towards the close.
Published on March 9, 2026
