The rupee and bond markets awaits the Reserve Bank of India (RBI)'s monetary policy review, to be announced on Tuesday. It is expected the dollar might strengthen globally but the rupee could find a support due to intervention by RBI. Government bond yields are expected to trade range-bound.
Most experts say RBI is expected to leave rates unchanged. On January 15, it had cut the repo rate by 25 basis points to 7.75 per cent. "The rupee might trade in the range of 61.50 to 62.50 to a dollar this week," said the head of treasury of a private sector bank.
The rupee ended stable at 61.87 on Friday. The bond market believes even if rate cut does not happen on Tuesday, RBI could make dovish statements. As a result, yields might see a drop of a few basis points. "The yield on the 10-year bond is expected to trade in the range of 7.65 to 7.75 per cent next week. We do not see a significant fall in yields," said a bond trader with a foreign bank.
The yield on the 10-year bond ended at 7.69 per cent, compared with the previous close of 7.71 per cent.
