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The rupee is expected to weaken this week owing to month-end dollar demand from importers and bond yields could rise further as the impact of the 25 basis points increase in the repo rate will linger.
"Month-end dollar demand from importers will keep the rupee under pressure. The rupee may trade in the range of 61.50 to 63 a dollar," said a currency dealer with a private sector bank.
"In the coming days, the bias will be towards yields rising. RBI will also announce the issuance calendar for marketable securities for the second half of the financial year soon. That will provide further direction to bond yields," said a government bond dealer with a public sector bank.
The decline came as a knee-jerk reaction to the equity sell-off immediately after the Reserve Bank of India (RBI) raised the repo rate to 7.50 per cent in the mid-quarter monetary policy review on Friday. The yield on the 10-year benchmark government bond 7.16 per cent 2023 ended at 8.58 per cent on Friday, compared to the previous close of 8.19 per cent.
The Street sees the yield on the 7.16 per cent 2023 government bond trading in the range of 8.65-8.40 per cent this week.
Due to month-end dollar demand, the rupee had touched an all-time low of 68.85 against the greenback last month.
The rupee ended at 62.28 a dollar on Friday, compared to Thursday's 61.78.
