 "No rate cut to harden bond yields; rupee might weaken")
The movement of government bond yields and the rupee against the dollar this week depends on the Reserve Bank of India's (RBI) mid-quarter monetary policy review tomorrow.
Many experts said RBI will maintain status quo on key policy rates. If that happens, government bond yields will rise. The Street also feels RBI might again flag the current account deficit as a concern, due to which the rupee could weaken.
The yield on the 10-year benchmark government bond 7.16 per cent 2023 ended at 7.31 per cent on Friday, compared with the previous close of 7.33 per cent. Yields fell, drawing comfort from easing inflation and a recovery in the rupee against the dollar.
According to government bond dealers, the yield on the 7.16 per cent 2023 bond will trade in the band of 7.35-7.40 per cent this week. Yields will rise in the absence of a cut in the repo rate, currently at 7.25 per cent.
Currency dealers expect the rupee to trade in the range of Rs 57 to Rs 58.2 a dollar. According to dealers, RBI might again intervene in the market by way of dollar sales by state-run banks to arrest the fall in the currency.
Many experts said RBI will maintain status quo on key policy rates. If that happens, government bond yields will rise. The Street also feels RBI might again flag the current account deficit as a concern, due to which the rupee could weaken.
The yield on the 10-year benchmark government bond 7.16 per cent 2023 ended at 7.31 per cent on Friday, compared with the previous close of 7.33 per cent. Yields fell, drawing comfort from easing inflation and a recovery in the rupee against the dollar.
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The rupee ended at Rs 57.5 on Friday, against the previous close of Rs 58. The gains were due to large dollar sale by exporters in the spot and forward markets.
According to government bond dealers, the yield on the 7.16 per cent 2023 bond will trade in the band of 7.35-7.40 per cent this week. Yields will rise in the absence of a cut in the repo rate, currently at 7.25 per cent.
Currency dealers expect the rupee to trade in the range of Rs 57 to Rs 58.2 a dollar. According to dealers, RBI might again intervene in the market by way of dollar sales by state-run banks to arrest the fall in the currency.