The spot rupee is expected to rule in 45.85-46.10 band against the US dollar on the back of good forex inflows.
Even though the 10-year US treasury yields are on the rise, dealers feel inflows will get affected only when the rise becomes consistent. They feel concrete signs of a global recovery are yet to be seen.
Dealers feel that, even if the yields are rising and the global economy recovers, it will take at least six months for them to effect inflows.
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As for now, inflows will continue till repo rates are cut to the extent that the interest rate differential dies down.
The RBI intervention to pull back the spot rupee to 46.23 after it slipped below 45.94/95 to the dollar has signaled that the apex bank is comfortable with the rupee ruling at around 46 and above but not under 46.
Therefore, even if backed by inflows and the absence of demand for dollars, the rupee can comfortably breach 46 levels.
However, it is expected that the rupee will be aggressively supported by the RBI to above 46 levels.
One factor that could push the rupee down will be the RBI