RBI intervention steadies rupee, governor's rate comment pulls down hedging costs

The rupee held steady at around 94.70 per dollar after the RBI likely intervened through dollar sales by state-run banks, pulling the currency back from an intraday low of 94.9150. Separately, RBI Governor Sanjay Malhotra stated it was premature to discuss interest rate hikes, causing 1-year forward premiums to drop 12 basis points to 2.80%. The RBI also allowed banks to lend to non-residents against FX deposits to boost foreign inflows, which supported the banking sector and pushed the benchmark Nifty 50 up 0.7%, while the 10-year government bond yield declined 2 basis points to 6.81%.