Rupee snaps seven-session losing streak as oil prices ease; bond yields stay above 7%

The rupee could remain in focus over the coming sessions as movements in crude oil prices, the Reserve Bank of India (RBI) intervention and global interest rate expectations continue to drive sentiment. While easing oil prices have provided some relief to the domestic currency, elevated bond yields suggest markets remain cautious about the inflation and rate outlook.

Brent crude declined for a third consecutive session, falling more than 1.3% to around $103 a barrel, even though prices remain above the $100 mark. The pullback comes as concerns over supply disruptions from West Asia begin to moderate.

The decline in oil prices helped the rupee recover from recent lows. The currency strengthened to around 95.73-95.76 per US dollar, breaking a seven-session losing streak after weakening beyond the 96-per-dollar level. It was last trading near 95.78.

Market participants also reported that the RBI was active in the foreign exchange market through dollar-rupee swaps to support the currency.

As the report noted, the rupee therefore has managed to find some much-needed breathing room today, strengthening slightly to around 95.73–95.76 per US dollar.

It also said this modest rebound breaks a sharp seven-session losing streak that had pushed the currency beyond the 96-per-dollar mark.

Meanwhile, the bond market continues to reflect concerns around inflation and global monetary policy. India's benchmark 10-year government bond yield is hovering around 7.05%, after recently moving above the 7% level.

According to the report, yields have recently experienced upward pressure, breaking past the 7% threshold due to rising global bond yields, higher crude oil prices and uncertainty over the outlook for global interest rates.

Going forward, investors will track crude oil prices, developments in West Asia, RBI's actions in the foreign exchange market and signals from major central banks to assess the direction of the rupee and domestic bond yields.

Catch all the latest updates from the stock market here