The Indian rupee is likely to see further devaluation this week, as the currency may approach a value of 90 against the US dollar. According to market participants, the lack of central bank action and current portfolio outflows are the forces behind the depreciating rupee. Last Friday, the currency reached its lowest point in history, at 89.49 per dollar, representing a 0.8% decrease in the week.
According to analysts, uncertainty surrounding a U.S.-India trade agreement and a suspension of active defense by the Reserve Bank of India (RBI) on key levels are contributing to pressure. It has lost 4.5% to date in 2025, and the rupee is trailing its regional counterparts, despite India having fairly strong economic fundamentals. According to analysts, the currency is expected to stabilize once a trade agreement comes to an end.
In India, the 10-year 6.33% 2035 benchmark bond was trading at 6.5665% last Friday. Market analysts expect the yield to range between 6.52% and 6.60% for the week, based on the RBI's liquidity policies and domestic growth indicators. The recent development saw the central bank buying bonds to the tune of 148.10 billion rupees (approximately $ 1.65 billion) during the week until November 14, and had already purchased bonds to the tune of 124.70 billion rupees during the previous week.
According to experts, the RBI's bond purchases were front-loaded, leading to speculation that they are a substitute for demand rather than a signal of yields. Investors will be keen on future economic releases, including the monthly financial deficit and industrial output figures, as well as the third-quarter GDP figures.
On December 5, the RBI has scheduled the announcement of its monetary policy resolution. Analysts expect a potential 25-basis-point reduction in the repo rate, based on projections for FY27 growth, inflation patterns, and real interest rates. According to Deutsche Bank, India is expected to grow its GDP by 7.7% in the July-September quarter, which is near the 7.8% growth rate in the April-June quarter.
The U.S dollar index rose last week as investors repriced expectations regarding potential Federal Reserve rate reductions. Traders continue to assess how international developments, domestic policy actions, and macroeconomic indicators impact currency and bond markets.