After the Reserve Bank of India introduced its most aggressive set of support measures since the taper tantrum of 2013, the Indian rupee recorded its largest gain in six months.

On Monday, the rupee appreciated by 1%, its biggest rise since April, with the USD/INR exchange rate quoted at 95.7575.

One-month USD/INR non-deliverable forwards had earlier fallen by as much as 0.8%. Bond prices declined, with the benchmark 10-year government bond yield rising 5 basis points to 7.35%, the highest level since November 2023.

After the rupee approached a record low of 97 per dollar, the Reserve Bank of India announced measures on Saturday to support the local currency. These measures include establishing a dedicated window to meet the dollar demand of state-owned oil companies and imposing reserve requirements on certain foreign exchange derivatives.

The Indian central bank had already raised interest rates on Wednesday and signaled that further tightening was possible. Madhavi Arora, Chief Economist at Emkay Global Financial Services, remarked: "These are tactical remediation tools, not structural solutions. On the surface, the measures can limit speculative positions, raise hedging costs, and tighten bank liquidity, offering some short-term support for the rupee."