Reuters Markets Eye – A volatile week is in store for the rupee and bonds.
The local currency could swing between 55.10 to 56.20 according to traders, given confluence of Greek elections, RBI’s policy decision, and Federal Reserve meeting.
Key events for rupee include Greek elections and Fed’s meeting ending on Wednesday, which some hope could lead to a further round of monetary easing that may push down the dollar and boost risk assets.
India’s 10-year bonds could rally if the RBI cuts the repo rate by 25 bps or by 50 bps. A lack of action could lead to a sell-off.
A cut in the cash reserve ratio would lead to a knee-jerk rally, but could raise questions about the scope of further bond purchases via open market operations and lead to profit-booking.