Societe Generale analysts note the INR rallied over 1% after RBI intervention and new limits on banks’ net open FX positions, but the currency remains down 4% this month amid heavy FPI outflows. They warn the relief is likely short‑lived given trade and fiscal headwinds and rising 10‑year IGB yields near 7.0%.

Intervention bounce versus structural headwinds

"The INR rallied by over 1% to 93.53/USD low after intervention by the RBI."

"The central bank directed commercial banks to limit their net open positions in the rupee in the FX markets to $100m at the end of each business day (effective 10 April) vs earlier limit of 25% of the firm’s total capital."

"The currency is down 4% this month amid record FPI outflows (- $12.1bn from equities and -$1.6bn from bonds)."

"Respite is likely to be short-lived, however given fundamental headwinds on trade and public finances, and negative FPI portfolio flows."

"The 10y IGB yield is on the cusp of breaching 7.0% for the first time since July 2024."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)