The weakness in rupee is seen limited this week and currency dealers believe the depreciation may be capped at Rs 61.50 a dollar. This is because the US job growth slowed a bit in July and the unemployment rate unexpectedly rose. Currency traders believe the slow recovery could lead to the US Fed keeping interest rates low for a while. The US job data was released on Friday after market hours.
On Friday, despite intervention in the foreign exchange market by the Reserve Bank of India (RBI), the rupee ended weak breaching Rs 61 a dollar. "The volatility in the rupee may continue and the rupee may touch 61.50. But RBI may limit the weakness with its intervention strategy as now the central bank has strong foreign exchange reserves," said the head of treasury of a public sector bank. On Friday, the rupee ended at 61.19 compared with the previous close of 60.56. Currency experts said the weakness in rupee is a temporary phenomena and the situation will improve a month later.
Government bond yields' movement will depend on RBI's monetary policy review.
On Friday, the yield on the 10-year benchmark bond ended at 8.76 per cent against the previous close of 8.72 per cent.
