RBI policy decision, growth data in focus for Indian rupee and bonds

The RBI policy decision is the focal point for the rupee and Indian bonds as investors weigh growth prospects amid energy-price volatility from the Iran conflict. The rupee closed at 95 per dollar on Friday, supported by RBI intervention that helped the week rise 0.7%, its best since late March. Markets broadly expect the RBI to hold the repo rate at 5.25% at Friday’s decision, with roughly 80% of economists in a May Reuters poll predicting no change. The RBI is also anticipated to update its inflation and growth forecasts for FY2027, while Goldman Sachs describes the stance as a hawkish pause intended to attract dollar inflows. Oil remains elevated, with Brent around $92 a barrel, roughly 30% above pre-war levels, complicating India’s policy outlook. The 10-year benchmark yield ended Friday at 7.0037%, down six basis points for the week as oil prices eased. Traders expect the yield to stay within a narrow 6.94%-7.06% range ahead of the policy decision, with attention on oil movements and war developments. Investors also await India’s January-March GDP data due Friday, a key input for the RBI’s growth forecast and policy stance.