Rupee hits over one-month high, 10-year bond yield falls to 7.17%

The Indian rupee gained for the fifth straight session on Thursday as crude oil prices eased following the Democrats’ victory in the US midterm elections. Sovereign bond yields also eased further on Thursday to hit an over one-month low. Bond prices and yields are inversely related.

The rupee, which opened at 94.36 against the dollar — compared with the previous close of 94.65 — strengthened to 94.33 during the day before giving up some gains to settle at 94.47 — its best level since October 21, 2026.

“The Indian rupee extended its northbound journey for the fifth consecutive session, supported by a declining US dollar and lower Treasury yields. Risk-on sentiment, driven by foreign fund inflows and softer crude oil prices, further underpinned the domestic currency. Spot USD/INR retraced to its October lows, triggering some bargain buying in today's session. In the near term, the pair faces psychological support at 94.00, with resistance pegged at 94.90,” said Dilip Parmar, Senior Research Analyst, HDFC Securities.

The rupee gained 0.5 per cent in November and 1.4 per cent in the quarter on the back of regulatory measures aimed at curbing speculative bets in the derivatives market.

The yield on the benchmark 10-year government bond ended 2 basis points (bps) lower on Thursday at 7.17 per cent. The 10-year bond yield softened by 24 bps in November.

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“The recent sharp fall in Indian bond yields reflects both the fall in oil prices as well as some general easing in global yields. It has perhaps been accentuated owing to market positioning which may have been somewhat lighter on duration in the run up to the fall,” said Suyash Choudhary, Chief Investment Officer – Fixed Income, Bandhan Mutual Fund.

The 10-year government bond yield is at its lowest since 29 September.

“That said, this change in yield dynamic is only sustainable if one sees some measurable easing in the AI capex rollout globally which in turn is causing a strong competition for global capital. This is reflected in generally higher global real bond yields, notwithstanding the recent easing. For the time being, we don’t see these conditions forming and therefore retain the view of higher yields in the time ahead,” Choudhary told Business Standard.

Brent crude futures were down nearly 9 per cent to $95.93 per barrel following the US elections, which raised expectations of a possible diplomatic settlement of the US-Iran conflict and a reduction in geopolitical risks to Middle Eastern oil supplies. The January 2027 Brent contract was also down nearly 9 per cent at $95.32 on Thursday.

“The possibility of improved supplies through the Strait of Hormuz has further weighed on prices. However, persistent uncertainty over the negotiations and the risk of renewed tensions could limit further downside. The sharp correction from levels near $120 in late October is significant and provides some relief to oil-importing countries such as India, although volatility is likely to remain elevated,” according to a note from Finrex Treasury Advisors.