Yields might rise

Government bond yields could rise further from the current levels this week, as there are concerns in the Street, the Reserve Bank of India (RBI) might resort to further tightening measures, resulting in rupee appreciation.

The yield on the 10-year benchmark bond 7.16 per cent 2023 ended at 8.16 per cent on Friday, compared with the previous close of 8.19 per cent. The government bond auction for a notified amount of Rs 15,000 crore on Friday devolved partially on primary dealers to the extent of Rs 1,330.3 crore. "The yield on the 10-year benchmark bond may trade in the range of eight to 8.35 per cent this week," said Baljinder Singh, government bonds dealer, Andhra Bank. On Wednesday, the yield on the 10-year government bond had touched 8.50 per cent in intra-day trades as RBI announced further liquidity tightening moves late evening on Tuesday.

RBI will announced the monetary policy on Tuesday.

Meanwhile, the rupee is seen strengthening further from the current levels this week. On Friday, the rupee closed at Rs 59.04 per dollar, compared with the previous close of Rs 59.11. The strengthening was despite month-end dollar demand from importers.

RBI's liquidity tightening moves helped the rupee stabilise. However, the rupee has still not appreciated significantly.

"The rupee is expected to trade in the range of Rs 58.50-59.50 this week," said a currency dealer with a forex advisory firm. However, the dealer added that dollar demand is expected to continue.