The Indian rupee is expected to see a decline on Monday due to the rise in U.S. Yields. This increase has made the U.S. Dollar stronger against currencies and Asian currencies.
Forecasts based on deliverable forwards suggest that the rupee’s opening value against the U.S. Dollar will be around 82.92-82.94, slightly different from its previous value of 82.8450 in the last trading session.
During the week the movement of the rupee has been limited because of interventions by the Reserve Bank of India (RBI) to prevent it from falling below the important threshold of 83. Anil Bhansali, head of treasury at Finrex Treasury Advisors stated that if RBI continues selling dollars, we may see the dollar-rupee exchange rate fluctuating between 82.60 and 82.90 this week; otherwise, it could surpass 83.
On Friday, there was an eight basis points (bps) increase in the 10-year U.S. Yield, which also saw a rise in Asia. Currently standing at 4.18%, this yield is 16 bps away from its peak in October 2022.
According to a report, the increase in yields appears to be driven by factors related to the supply of bonds. The anticipation of a number of bond issuances in the coming months has raised concerns about supply. Moreover, Fitch’s recent decision to downgrade U.S. Debt has further contributed to these concerns.
In addition, longer-term yields in both the U.K. And Germany saw increases Friday, reflecting the global sentiment towards strengthening major currencies.