Indian bonds extended gains after the Reserve Bank of India Governor Sanjay Malhotra said the latest data suggests there's scope for an interest-rate cut.
Malhotra noted that the Monetary Policy Committee had already signaled room for policy easing at its October meeting, and the indicators since then — including inflation — have not diminished that expectation, he said in an interview with Zee Business on Monday evening. It is up to the rate-setting panel to take a call at its upcoming meeting early next month.
The benchmark 10-year bond yield fell four basis points to 6.48% after the comments.
Malhotra said the rupee's recent weakness is a natural outcome of inflation gap with advanced economies. A 3%–3.5% annual drop is typical for the currency, he added, noting that the RBI's focus is on containing excessive volatility rather than defending any specific level.
The rupee, which hit a new fresh low against the dollar on Friday, is Asia's worst performer this year, having weakened about 4% versus the greenback.
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