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FX Weakens, Bonds Rally Post RBI On Hold Decision

INDIA

USD/INR spiked above 82.00 on the RBI on-hold outcome (high near 82.06), but is now back sub this figure level. Earlier lows were at 81.86. The market reacting to RBI's on hold decision, when the majority of economists forecast +25bps. The RBI has left the door ajar for further tightening, as it maintains a withdrawal of accommodation stance. This is has likely helped limit the fall out for INR at the margins.

  • The reaction in bond markets has been more pronounced. The 5yr yield off by 13bps to 7.01%, while the 10yr is back to 7.18, -9bps so far.

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