Rupee might weaken this week, yields could fall

The rupee ended marginally week on Friday at 63.64 compared with previous close of 63.63 per dollar.

The bias for the rupee continues towards depreciation this week and a lot will depend on how domestic equities perform.

“The rupee is seen trading in the range of 63.40 to 64.10. Month-end dollar demand from importers would continue on Monday and Tuesday. The concerns of the Greece bailout continue to linger in the market. Besides, the Reserve Bank of India (RBI) may continue to mop-up dollar flows from the market,” said Anindya Banerjee, currency analyst, Kotak Securities. The rupee ended marginally week on Friday at 63.64 compared with the previous close of 63.63 a dollar. However, during the week, the rupee had weakened by eight paise.

According to Ashutosh Khajuria, president (treasury), Federal Bank, the government bond yields might see some correction this week as some bond-buying might emerge.

“The yield on the 10-year benchmark bond may trade in the range of 7.90 to 7.95 per cent, while the yield on the new 10-year bond may trade in the range of 7.70 to 7.78 per cent,” he said. The yield on the 10-year benchmark bond ended at eight per cent on Friday compared with the previous close of 8.02 per cent. During the week, the yield had risen by 12 basis points. The yield on the new 10-year bond had ended unchanged at 7.82 per cent. During the week the yield had risen by 11 basis points.

RBI on Friday cancelled the auction of three bonds of the four government securities on auction. The only paper to sail in the auction was the 7.88 per cent 2030 paper and the auction of the remaining three papers namely 7.35 per cent 2024, 7.95 per cent 2032 and the 8.17 per cent 2044 were cancelled.