Gold Silver Reports (GSR) – Money Market Update – The rupee is seen opening steady at around its weakest in nearly 14 months at 66.8950 per dollar, pressurised by foreign fund outflows and rising oil prices. ANZ, Standard Chartered and Maybank are among a spate of foreign bank and brokerages that have lowered their forecasts for the rupee amid worries about a widening current account deficit.
India imports two-thirds of its crude requirements and the spurt in oil prices has coincided with the slowdown in capital inflows. On Wednesday, it dropped 0.8 percent, marking its worst drop in two months. Meanwhile, the rupee’s weakness is likely to fan inflationary expectations, keeping the appetite for bonds rather muted. Deutsche Bank said in a note that rising oil prices could see the RBI hike rates as early as June.
The benchmark 10-year bond yield climbed five basis points on Wednesday to 7.74 percent, having surged from this year’s low of 7.12 percent on April 5. A 120 billion rupee bond sales will test appetite amongst investors today.
