“For the rupee we expect a range of 83.15 to 83.65 during the coming week as the RBI steps in to absorb dollar inflows that may come in,” currency traders said. The central bank will also be present above the 83.55 level.
The RBI periodically intervenes in the market through liquidity management, including selling the dollar, to prevent sharp fluctuations in the local currency, although it has intermittently fallen to record highs.
Oil prices were ahead of US inflation data and set for a third weekly gain. Brent was trading at $85.61 per barrel.
The benchmark 10-year government bond yield was unchanged at 7.00%, opening at 6.99%.
“Inflows were on expected lines so the market opened flat and on account of the auction it gave up its gains and closed down 10 paise”, bond traders said.
Liquidity eased slightly in the banking system with a deficit of Rs.92,651 crore, which was Rs. 1.6 lakh crore. RBI conducted the Variable Rate Repo (VRR) auction yesterday and announced the same today.
However, market players need sustainable liquidity as the VRR auction brings in very transient liquidity, traders said.
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