Rupee seen trading with a weakening bias

Govt bond yields movement on the other hand shall depend upon the GDP data and the CPI-based inflation data to be released this week

The rupee was seen trading with a weakening bias this week as it is believed that the Reserve Bank of India (RBI) will tap every opportunity to mop up dollar flows attracted by domestic markets. Government bond yields movement on the other hand shall depend upon the Gross Domestic Product (GDP) data and the Consumer Price Index (CPI)-based inflation data to be released this week. The two crucial data points will also have an impact on the rupee against the dollar.

The revised GDP data for the quarter ending December 31, 2014 will be released on Monday while the CPI-based inflation data for January 2015 which will have a base year revision will be released on Thursday.

The rupee ended at 61.70 on Friday compared with previous close of 61.74. RBI's foreign exchange reserves rose to an all-time high of $327.88 billion for the week ended January 2014, shows latest data. "The yield on the 10-year bond yield may trade in the range of 7.65 to 7.75 per cent. The bond market awaits crucial data this week," said the head of treasury of a state-run bank. The yield on the 10-year bond ended stable at 7.70 per cent on Friday.