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The Reserve Bank of India (RBI) has stepped into the forex market this Wednesday, potentially employing a Sell Buy Swap strategy to stabilize the rupee, which has been under pressure due to soaring US Treasury yields. This move comes as the US Treasury yields reached a peak of 4.88%, according to information released on Wednesday, October 4, 2023.

This intervention was suggested by Amit Pabari of CR Forex, who noted that the central bank’s action would likely help steady the Indian currency amidst global economic turbulence. The RBI’s decision is seen as a strategic move to maintain the resilience of the rupee, which has been noted by Hitesh Jain of Yes Securities. Jain also highlighted India’s strong economic outlook as a contributing factor to the currency’s stability.

Despite the global volatility, the Indian bond market has shown remarkable stability. Traders have remained focused on the Monetary Policy Committee’s upcoming decision on the repo rate and potential implications of a 25 basis point rate hike by the US Federal Reserve in 2023.

The yield on India’s 10-year government bond has remained steady, further reflecting robust economic conditions within the country. This stability is indicative of investor confidence in India’s economic future and resilience in the face of external financial pressures.

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