- Economy
- Education And Career
- Companies & Markets
- Gadgets & Technology
- After Hours
- Healthcare
- Banking & Finance
- Entrepreneurship
- Energy & Infra
- Case Study
- Video
- More
- Sustainability
- Web Exclusive
- Opinion
- Luxury
- Legal
- Property Review
- Cloud
- Blockchain
- Workplace
- Collaboration
- Developer
- Digital India
- Infrastructure
- Work Life Balance
- Test category by sumit
- Sports
- National
- World
- Entertainment
- Lifestyle
- Science
- Health
- Tech
India Rupee, Bond Yields To Take Cues From Fed Decision, Guidance
It's highly likely that the Fed will raise rates by 25 basis points due to persistent inflation and strong U.S. data, with the central bank maintaining a bias toward further rate hikes
Photo Credit :
The Indian rupee's direction this week will be influenced by policy outcomes from major central banks and important U.S. data releases. The currency closed at 81.94 against the dollar on Friday, with expectations for it to trade within the range of 81.80 to 82.40 during the week.
The Federal Reserve's policy decision is scheduled for Wednesday, followed by the European Central Bank (ECB) on Thursday and the Bank of Japan (BOJ) on Friday. It is highly likely that the Fed will raise rates by 25 basis points due to persistent inflation and strong U.S. data, with the central bank maintaining a bias towards further rate hikes. The ECB is also expected to raise rates by a similar margin.
The upcoming policy-setting meetings hold significant importance, and yields are on the rise as central banks are cautious about inflation. Traders will closely monitor the U.S. core personal consumption expenditures index for signals on interest rates, which is the Fed's preferred inflation gauge.
Regarding government bond yields, the benchmark 7.26 per cent 2033 bond yield ended at 7.07 per cent on Friday, remaining largely unchanged for the week. It had eased previously, tracking U.S. peers after a softer-than-expected inflation reading suggested the Fed might pause rate hikes after a final increase in July. However, caution set in when the domestic yield fell below the key technical level of 7.08 per cent last week, leading to some reversal in the downtrend. Traders expect the benchmark yield to move within the range of 7.03 per cent to 7.12 per cent this week.
The 10-year U.S. yield, currently around the crucial level of 3.80 per cent, is awaiting guidance from the Fed for a significant directional breakout.
Vikas Goel, managing director, and chief executive at PNB Gilts, predicts that the domestic benchmark yield may touch 6.95 per cent if the Fed indicates a pause, while the lack of such an indication could take the yield back to around 7.15 per cent levels.