Business EconomyPosted at: Jun 5 2026 4:38PM


RBI’s strategic measures boost confidence in rupee, bond markets: Kotak Securities

New Delhi, Jun 5 (UNI) The Reserve Bank of India’s latest monetary policy has been welcomed by market experts as a comprehensive package aimed at strengthening India’s external position while maintaining a firm focus on inflation management.
According to Anindya Banerjee, Head of Commodity and Currency Research at Kotak Securities, the policy goes beyond a conventional rate decision and should be viewed as a broader balance of payments strategy. The RBI kept the repo rate unchanged at 5.25 per cent and retained its neutral policy stance, even as it raised its FY27 inflation forecast by 50 basis points to 5.1 per cent.
Banerjee noted that the central bank has clearly signaled that interest rates will remain primarily focused on inflation control, while measures to support the rupee will be pursued through capital account initiatives.
Among the key announcements are the expansion of the Fully Accessible Route (FAR) to all new 15-year, 30-year, and 40-year government securities, removal of Foreign Portfolio Investor (FPI) concentration limits, extension of FCNR(B) hedging support and the PSU ECB swap window, as well as restoration of the export realization period to nine months.
“These measures together represent the most comprehensive effort to mobilise dollar inflows since 2013,” Banerjee said.
The RBI’s initiatives have been further strengthened by the Centre’s decision to remove taxes on foreign investments in government securities. Market participants believe this move addresses one of the key concerns repeatedly highlighted by global bond funds and index providers, making Indian debt markets more attractive to overseas investors.
The measures are expected to provide support to the long end of the government bond yield curve and improve investor sentiment. Analysts also see positive implications for the Indian currency, particularly if global crude oil prices remain below USD 100 per barrel.
Banerjee expects the rupee to strengthen toward the 94–94.5 range in the near term, while the upside for USD/INR appears capped around 96. Further gains, however, will depend on the pace of dollar inflows generated through the newly announced channels and the direction of global oil prices.
With foreign exchange reserves standing at approximately USD 682 billion, the RBI is seen as well-positioned to manage currency volatility and support market stability as the new measures take effect.
The policy package has been widely viewed as a proactive step to attract foreign capital, strengthen external balances, and reinforce confidence in India’s financial markets.
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