Rupee seen weakening further

The rupee is expected to weaken further this week, due to dollar buying by importers. There is also market concern that the yuan's devaluation would lead to India following a strategy of competitive devaluation.

Last week, the rupee fell to nearly a two-year low, breaching 65 to a dollar. "This week, the trading range will be between 64.50 and 65.60, and the bias is more towards weakening," said the head of treasury of a state-run bank.

On Friday, it ended at 65.01 from Thursday's 65.11. It had opened at 65.18 and during intra-day trade, touched a low of 65.31.

Government bond yields are expected to stay range-bound. "The yield on the 10-year bond might trade in the 7.7-7.8 per cent range," said a trader.

Consumer Price Index inflation eased to 3.78 per cent in July, compared with 5.4 per cent a month ago.

On Friday, a day after this data was released, the yield on the 10-year benchmark bond ended at 7.75 per cent from the previous close of 7.74 per cent.