Indian Rupee: Curve drivers shift with structural inflows – DBS
Ni FXStreet Insights Team
Na-update: 25 Jun 2026
Sikat na Artikulo
DBS Group Research economist Sherilyn Chew analyses Indian government bond performance after the Reserve Bank of India’s (RBI) June 5 capital flow liberalisation.
DBS Group Research economist Sherilyn Chew analyses Indian government bond performance after the Reserve Bank of India’s (RBI) June 5 capital flow liberalisation. She highlights a sharp rally in 2Y IGBs driven by repricing of RBI policy expectations and a more measured 10Y move supported by foreign inflows, concluding that structural demand and fading hike pricing could lead to modest curve flattening.
RBI repricing versus structural bond bid
"The 2Y IGB yield has compressed by 30bps since the announcement, with the move largely driven by a repricing of RBI policy expectations."
"At this stage, the scope for further decline in 2Y yields appears more limited."
"While RBI rhetoric suggests that a near-term rate hike is unlikely, risks remain tilted to the upside, particularly via food inflation."
"Unlike the front-end move, which largely reflects a one-off repricing, the long-end rally appears anchored in an ongoing reallocation, suggesting that the 10Y offers further room to compress."
"Taken together, this divergence suggests some scope for modest curve flattening ahead."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
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