Indian Rupee outperforms regional peers as bond inflows offset broad dollar strength and softer economic data.
The Indian Rupee remained largely unchanged over the past week, supported by debt portfolio inflows that helped it outperform regional currencies. Despite broader US Dollar strength, the INR avoided significant losses as domestic bonds rallied following comments from Reserve Bank of India Governor Malhotra, who dismissed speculation of tighter monetary policy.
India’s 10-year government bond yields retreated to 6.75%, while the 1-year overnight indexed swap rate fell to 5.75% from 6.38% a month earlier. Meanwhile, the composite PMI eased to 57.4 in June from 59.3 in May, signaling slower growth in manufacturing and services. However, the dollar’s strength overshadowed declines in gold below $4,000 and Brent crude to pre-war levels.