Government bond yields are expected to fall this week on the back of softening inflation. The rupee is seen range-bound. In August, retail inflation fell to 7.8 per cent from 7.96 per cent in July. The softening inflation has given hopes that the Reserve Bank of India might soon resort to cutting rates. Bond market traders see the yield on the 10-year bond falling below the 8.50 per cent mark this week. The yield on the 10-year bond ended at 8.50 per cent on Friday compared with the previous close of 8.51 per cent. The liquidity condition might tighten a bit this week, ahead of the corporate advance tax payment deadline. However, the government plans to repurchase government bonds through reverse auction for Rs 20,000 crore on Tuesday, as a result of which the pressure on liquidity is not seen much. The rupee had ended at 60.66 a dollar on Friday compared with the previous close of 60.93. According to currency dealers, dollar demand from oil marketing companies has picked up due to fall in global crude oil prices.
According to currency dealers, dollar demand from oil marketing companies has picked up due to fall in global crude oil prices.
"The rupee may trade in the range of 61-60.50 a dollar this week. If dollar demand increases from these oil importers then it can even breach the 61 mark," said a currency dealer with a state-run bank.
