Rupee might touch 64 again due to month-end dollar demand

The rupee is seen weakening in the next few days and might even touch 64 a dollar, as month-end dollar demand by importers intensifies. Though on Wednesday the rupee ended stable, experts believe the weakening bias might continue.

The rupee ended at 63.60 on Wednesday compared with Tuesday’s 63.61 per dollar. The rupee had opened at 63.68 and during intra-day trade touched a low of 63.71.

“There was dollar demand from importers and oil companies, which had led to the intra-day weakness. Besides, concerns still continues pertaining to Greece bailout. But there were also foreign flows in the domestic market which helped. The rupee touching 64 per dollar again cannot be ruled out due to month-end dollar demand by importers,” said Sandeep Gonsalves, forex consultant and dealer, Mecklai & Mecklai.

Till last Wednesday (June 17), the rupee was trading beyond the 64-mark.

“It is temporary and we need to see whether the rupee has really appreciated. We may go back to 64 per dollar again,” said Suresh Nair, director, Admisi Forex India.

Meanwhile, bond yields rose to a one-week high on Wednesday. The yield on the 10-year benchmark bond rose by six basis points compared with the previous close to end at 7.98 per cent. The yield on the new 10-year bond ended at 7.80 per cent compared with previous close of 7.75 per cent. The yield on the 10-year benchmark bond had ended at 8.03 last Wednesday (June 17) while the yield on the new 10-year bond had ended at 7.85 per cent on the same day.

“There has been some  profit booking and also some concern among traders on further rate cuts. Movement of bond yields will be event driven and data driven. RBI, too, has been maintaining that they would be driven by data,” said Killol Pandya, a senior debt fund manager at LIC Nomura Mutual Fund.