 "Some respite likely for bond yields may fall")
The Street expects the rupee to continue to appreciate this week, with the Reserve Bank of India (RBI) likely to announce some more measures to prop the domestic currency. However, before gathering momentum during the week, the rupee mightweaken on Monday due to low gross domestic product (GDP) numbers for the first quarter of FY14.
The rupee had appreciated for second straight day on Friday on the back of dollar sale by state-run banks on behalf of RBI. The currency ended at 65.71 against the dollar, compared to the previous close of 66.60.
The growth in GDP for the first quarter of the financial year stood at 4.4 per cent, compared to a growth of 4.8 per cent in the previous financial year. Reacting to this, foreign institutional investors (FIIs) might sell their shares in the domestic market.
"On Monday, the rupee may initially touch 66.50 per dollar. But later, it may recover as more measures are expected from RBI," said S Srinivasaraghavan, head of treasury at Dhanlaxmi Bank.
According to Srinivasaraghavan, the rupee would trade between 66.50 and 64 this week.
Last Wednesday, the rupee had touched an all-time low of 68.85 against the greenback. However, on Thursday the Indian currency recorded its biggest recovery in 26 years as RBI opened the foreign exchange swap window to meet the daily dollar requirements of the oil marketing companies.
"RBI would try to reduce the pace of weakening the rupee. The rupee breached the 68 per dollar mark very fast. RBI would try to get the rupee at a level of 65 per dollar. They would like the rupee to trade in a small range so that the volatility comes down. The rupee will eventually weaken because there are a lot of macro factors in favour of the US," said Arvind Narayanan, head of sales, treasury and markets at DBS Bank.
Tracking the rupee appreciation bond yields may fall further. "The yield on the 10-year benchmark government bond 7.16 per cent 2023 is expected to trade in the range of 8.40-8.70 per cent," said Srinivasaraghavan.
The yield on the 10-year bond ended at 8.60 per cent on Friday, compared with the previous close of 8.77 per cent.
The rupee had appreciated for second straight day on Friday on the back of dollar sale by state-run banks on behalf of RBI. The currency ended at 65.71 against the dollar, compared to the previous close of 66.60.
The growth in GDP for the first quarter of the financial year stood at 4.4 per cent, compared to a growth of 4.8 per cent in the previous financial year. Reacting to this, foreign institutional investors (FIIs) might sell their shares in the domestic market.
"On Monday, the rupee may initially touch 66.50 per dollar. But later, it may recover as more measures are expected from RBI," said S Srinivasaraghavan, head of treasury at Dhanlaxmi Bank.
According to Srinivasaraghavan, the rupee would trade between 66.50 and 64 this week.
Last Wednesday, the rupee had touched an all-time low of 68.85 against the greenback. However, on Thursday the Indian currency recorded its biggest recovery in 26 years as RBI opened the foreign exchange swap window to meet the daily dollar requirements of the oil marketing companies.
"RBI would try to reduce the pace of weakening the rupee. The rupee breached the 68 per dollar mark very fast. RBI would try to get the rupee at a level of 65 per dollar. They would like the rupee to trade in a small range so that the volatility comes down. The rupee will eventually weaken because there are a lot of macro factors in favour of the US," said Arvind Narayanan, head of sales, treasury and markets at DBS Bank.
Tracking the rupee appreciation bond yields may fall further. "The yield on the 10-year benchmark government bond 7.16 per cent 2023 is expected to trade in the range of 8.40-8.70 per cent," said Srinivasaraghavan.
The yield on the 10-year bond ended at 8.60 per cent on Friday, compared with the previous close of 8.77 per cent.
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