Rupee seen weakening further, yields might rise

Due to the ongoing issues in Ukraine, Israel-Palestine and Iraq, the rupee might be volatile in the coming weeks

The rupee is expected to trade with a weakening bias this week and government bond yields are expected to rise.

The negative sentiments in the global market, coupled with month-end dollar demand from importers is set to put pressure on the rupee.

K A Prabakaran - head of forex business, UAE Exchange India, said, "We are expecting a range of 59.80 to 60.80 for the rupee this week, amid the ongoing issues in Ukraine, Israel-Palestine and Iraq. Investors will return to safe haven currencies to avoid further risk. The negative sentiments in the global financial market will reflect in emerging markets and the domestic stock market, resulting in foreign institutional investors outflows. Month-end demand for dollar from oil companies could also hurt the rupee." The rupee ended at 60.29 on Friday, compared with the previous close of Rs 60.18 a dollar. Government bond yields are seen rising due to expectations of a new 10-year bond which shall replace the existing benchmark.

"The yield on the 10-year bond may trade in the range of 8.70-8.80 per cent this week," said Balginder Singh, a government bond dealer at Andhra Bank. Most bond traders expect rising yields and according to them, when the new 10-year bond will be auctioned, yields will soften.