Treasury officials see the rupee, which saw its all-time low level at closing last week, gaining strength and hovering in the 52.80-53.50 range against the dollar this week on the back of the recent measures taken by the Reserve Bank of India (RBI).
According to IDBI Bank treasury head N S Venkatesh, the rupee will be in the range of 52.80-53.50 to the dollar in the coming week.
"After the measures relating to the exchange earners' foreign currency account (EEFC), the rupee is likely to appreciate in the near-term though there is no change in the fundamentals," Venkatesh told PTI.
However, he warned that a lot will depend on the developments in the troubled eurozone area and its impact on euro, saying "the euro will be a key factor to watch out for".
Another bank official also echoed similar sentiment, saying the rupee will stabilise for a while, beginning next week.
"I think, the rupee will gain this week due to the recent RBI measures on the EEFC front, which will add around $2.5 billion into the system in the next fortnight," Dena Bank treasury general manager Sudhir Kumar Jain said.
Last Thursday, RBI ordered exporters to convert half of their dollar holdings in their EEFC account into the rupee forthwith, as a desperate measure to stem the falling local unit, which the previous day had hit its life-time low of 53.83 to the greenback.
On the impact of the faltering rupee on the yields on the 10-year benchmark, treasury officers said the treasury bills are likely to be in the range of 8.55-8.60% this week.
"The 10-year benchmark yield should be in the range of 8.55-8.60% this week," IDBI Bank's Venkatesh said. Benchmark government bond closed at 8.56% on Friday.
"As new bonds issuances happen in the near future, the old benchmark yield will be range-bound and is not likely to breach 8.60 level this week," he said.
Dena Bank's Jain also said the yields are likely to soften in the coming week.