Rupee likely to appreciate; yields may fall
The rupee is expected to strengthen this week, while the government bond yields may fall.
According to currency dealers, the rupee may appreciate as the month-end dollar demand from importers comes to an end this week. Government bond dealers said yields might fall due to comfortable liquidity in the system currently.
The rupee ended at 62.45 on Friday, compared with previous close of 62.41 a dollar. "The rupee may strengthen to 62.25 this week. However, we also need to see how the dollar moves among a basket of currencies," said a currency dealer with a state-run bank.
Government bond yields are expected to fall from the current levels.
The yield on the 7.16 per cent 2023 bond ended at 9.05 per cent on Friday, compared with previous close of 9.01 per cent.
The yield on the 8.83 per cent 2023 bond ended at 8.74 per cent compared with the previous close of 8.72 per cent.
"Since there is comfortable liquidity in the system, the yields will fall from the current levels. Besides, the rupee may strengthen and tracking this, yields will fall," said the head of treasury of a public sector bank.
Due to comfortable liquidity, there is buying interest from traders for these bonds.
According to currency dealers, the rupee may appreciate as the month-end dollar demand from importers comes to an end this week. Government bond dealers said yields might fall due to comfortable liquidity in the system currently.
The rupee ended at 62.45 on Friday, compared with previous close of 62.41 a dollar. "The rupee may strengthen to 62.25 this week. However, we also need to see how the dollar moves among a basket of currencies," said a currency dealer with a state-run bank.
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Since the start of this financial year, the currency has weakened by more than 15 per cent. However, currency dealers also agree the Reserve Bank of India (RBI) will ensure that rupee may not weaken sharply.
Government bond yields are expected to fall from the current levels.
The yield on the 7.16 per cent 2023 bond ended at 9.05 per cent on Friday, compared with previous close of 9.01 per cent.
The yield on the 8.83 per cent 2023 bond ended at 8.74 per cent compared with the previous close of 8.72 per cent.
"Since there is comfortable liquidity in the system, the yields will fall from the current levels. Besides, the rupee may strengthen and tracking this, yields will fall," said the head of treasury of a public sector bank.
Due to comfortable liquidity, there is buying interest from traders for these bonds.