Updated December 26th, 2023 at 10:47 IST

Rupee, bond yields eye-rangebound week

Indian rupee and government bonds are anticipated to stay stable.

Reported by: Business Desk
Rupee falls 3 paise | Image:Pixabay
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In the final trading week of the year, the Rupee and government bonds are anticipated to stay stable, influenced by Asian currencies and US Treasury bonds.

The rupee closed slightly stronger against the dollar due to strength in Asian currencies and dollar sales by large foreign banks. The dollar, facing pressure amid expectations of US rate cuts, experienced a weekly decline.

Apurva Swarup from Shinhan Bank India noted the rupee's limited movement, attributing it to its passive stance amidst dollar weakness. Expectations suggest the rupee will likely maintain a range between 83.05 and 83.35, with subdued trading volumes as the year ends.

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While economic data remains light, the focus is on US initial jobless claims. The dollar's pressure persists due to expectations of impending Fed rate cuts, with investors pricing in a high probability of rate cuts by March.

India's 10-year bond yield rose slightly last week and is projected to fluctuate within a narrow range this week. Market participants seem cautious, with attention directed towards US Treasury bonds and potential movements in yields, anticipating further easing with potential rate cuts.

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Looking ahead, Vijay Sharma from PNB Gilts anticipates a more downward movement in yields in January, citing favourable conditions. The monetary policy committee is watchful of inflation risks amidst volatile food prices, as indicated in the December meeting minutes, where the repo rate remained unchanged at 6.50 per cent for the fifth consecutive meeting.

(With Reuters inputs)

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Published December 26th, 2023 at 09:04 IST