₹, bonds to balance on high wire of RBI rate decisions, US polls

Foreign exchange (forex) and government bond dealers expect the timeline for domestic interest rate cuts and the US presidential election to play crucial roles in Samvat 2081.

- ANJALI KUMARI

The next Samvat for the Indian bond market is projected to be a period of relative calm, marked by limited fluctuations in yields and a cautious policy stance from the Reserve Bank of India (RBI).

With no rate cuts projected until April 2025 and a focus on inflation control, the RBI's approach aligns well with current domestic and global economic conditions, bond market participants said.

Conversely, supported by robust domestic growth, steady capital inflows, and favourable external conditions, the rupee is well-positioned to offset short-term global pressures, dealers observed.

Although predicting long-term currency movements is challenging due to evolving geopolitical factors, the outlook remains cautiously optimistic, with resilience likely characterising the rupee's journey over the coming months.

Market participants indicated that the Indian bond market seems poised to enter a "long-term sleep cycle". This suggests a period of stabilisation or reduced volatility, likely with limited movement in benchmark yields.