Rupee trend unlikely to change, barring US debt ceiling shock

The currency may trade in the range of 60-62 per dollar this week

The rupee might appreciate further this week, on the back of positive sentiments in the market.

However, the near-term outlook would be determined by the Thursday deadline for the US debt ceiling. So far, talks haven't resulted in an agreement on the US budget crisis.

Besides, India is taking various steps to attract more dollar flows. "The rupee might trade in the range of 60-62 per dollar this week. The Reserve Bank of India (RBI) might not allow the rupee to appreciate much from current levels," said Partha Bhattacharya, deputy chief executive officer, Mecklai Financial.

On Friday, the rupee ended at 61.08, compared with the previous close of 61.36. It had opened at 61.10 and during intra-day trades, touched a high of 61.01 and a low of 61.37 a dollar.

The International Finance Corporation had launched India's first offshore rupee-denominated bond issue, which hopes to raise $1 billion, thus helping dollar flows into the country. The government is also in talks to gain entry into benchmark indexes, a move that will again help attract dollar flows.

Besides, RBI granted permission to banks to borrow from international or multilateral financial institutions for a limited period up to November 30, again a positive move for the rupee.

Meanwhile, government bond yields could rise, as the Street expects a higher print for the September Wholesale Price Index (WPI) -based inflation data due this week. August WPI inflation rose to 6.1 per cent, compared with 5.79 per cent in July.

"The yield on the 10-year benchmark government bond 7.16 per cent 2023 may trade in the range of 8.55-8.40 per cent this week," said S Srinivasaraghavan, head of treasury at Dhanlaxmi Bank.

The yield ended at 8.49 per cent on Friday compared with 8.42 per cent on Thursday. The rise was due to profit booking.