Rupee seen trading in 66.50-67.30 range this week: Ind-Ra

The rupee is likely to trade in 66.50-67.30 band and 10-year government security at 6.78-6.89 per cent range this week ahead of the outcome of the US presidential elections to be held on November 8, says a report.

"Both global and domestic markets are likely to be singularly focused on the outcome of US presidential elections, to be held on November 8. Domestically, currency and debt markets are likely to take cues from global developments amid this otherwise data-light week," India Ratings and Research said in a report here.

The rupee today opened at 66.75 against the dollar while the 10 year g-sec yield opened at 6.93 per cent.

The report said that in the run-up to the US presidential elections, both equity and debt markets have corrected as both lead candidates -- Republican presidential nominee Donald Trump and Democrat hopeful Hillary Clinton -- have close possibilities to win the elections.

Additionally, uncertainties over timeline and modalities of Brexit have kept investors sentiments cautious, it said.

"This is evident in the recent appreciation of Swiss franc and Japanese yen, which are largely viewed by investors as safe haven to hedge against the US dollar volatilities," the rating agency said.

The report said notwithstanding the swings in major global currencies and initiation of FCNR (foreign currency non-resident) deposits redemption, the rupee has exhibited a relatively steady performance.

A resurgence of risk-aversion sentiment globally will impact emerging market currencies, in general exposing rupee to potential pressure.

"However, the impact is likely to be cushioned in the absence of any knee jerk and panic-selling pressure from foreign investors," the rating agency said.

It also said that the government's upcoming repurchase auction (Rs 15,000 crore) will alleviate some pressure on demand-supply dynamics in the debt market as a combined gross supply of over Rs 41,000 crore is scheduled this week in the form of both central and state government borrowings.

Easy interbank liquidity conditions suggest limited need for durable liquidity injection, keeping scope for open market purchase operations dim in the near term, India Ratings said.

It said incremental scope for g-sec yields to soften significantly from the current juncture is limited due to front-loaded open market operations by the Reserve Bank and global volatility as key events unfold.