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The weakness in the rupee may continue this week as currency experts expect dollar demand by state-run oil marketing companies to continue in the market.
On Thursday, economic affairs secretary Arvind Mayaram was quoted by news channels as saying 30-40 per cent of state-run oil companies' dollar demand returning to the markets. This led to the rupee's fall on Friday and saw it post the worst week in two-and-a-half months.
“The rupee may touch the 63 a dollar this week. The weakening bias is expected to continue in the near-term,” said a currency dealer with a state-run bank.
The US payroll data released on Friday after market hours surprisingly showed strong US job growth in October, which may also lead to the rupee's weakening at the start of the week.
On Friday, the rupee ended at 62.48 compared to the previous close of 62.42 a dollar. During intra-day trades, the rupee had even dropped to 62.75 a dollar. The recovery was only due to the Reserve Bank of India intervening in the market through state-run banks.
The inflation data to be released this week will provide direction to the movement of government bond yields. Economists believe that inflation is again becoming a concern due to which there may be another hike in the repo rate next month.
On Friday, the 10-year benchmark government bond yield inched up and ended at 8.99 per cent compared to the previous close of 8.85 per cent.
“Yields will rise this week due to bond auctions in the absence of open market operations,” said a government bond dealer with a state-run bank. The street expects the yield on the 10-year benchmark government bond to breach the nine per cent mark this week.
