Rupee Strengthens, Bond Yields Hit One-Year High Amid Budget Borrowing Concerns

• The Indian rupee opened 22 paise stronger at 91.76 against the US dollar on Monday, January 2.
• The 10-year government bond yield rose to a one-year high of 6.78%, driven by higher-than-expected government borrowing.
• Union Budget 2026-27 announced a record ₹17.2 lakh crore borrowing plan, 18% higher than the current year.
• RBI reportedly intervened by selling dollars offshore to support the rupee, which had hit a record low of 91.9875 on January 30.
• Concerns about demand-supply imbalances in the bond market and continued rupee weakening are anticipated.

Why It Matters: Rupee strengthens slightly but faces pressure from record government borrowing and rising bond yields.