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The Rupee could be strong to steady (Tuesday, May 21, 2019)

The rupee is expected to open little changed against the dollar amid mixed regional cues on U.S-China trade. Worries over the intensifying trade dispute prompted a second day of decline on Wall Street on Monday. The S&P 500 Index slipped 0.7%, led by technology companies who are suppliers to Huawei. In Asian equities, stocks in Hong Kong and Japan dropped by up to 0.4%, while South Korean shares edged higher. In currencies, the Chinese yuan rose, while the Thai baht and the Malaysian ringgit slipped.

GOI bonds are likely to rise in early trade, as investors look to buy notes ahead of the results of the nation's general election. The yield on the benchmark 7.26% bond maturing in 2029 is likely to trade in a range of 7.25%-7.30% today. The note settled at a seven-week high 99.81 rupees, yielding 7.29%, yesterday. The rupee ended at a two-week high of 69.74 to the dollar. The median of the polls pegs the number of seats at 304 seats for the NDA.  A party or alliance needs 272 seats to form the government. The results are due on May 23.

The central bank is expected to boost its liquidity infusions into the banking system. It has bought bonds worth 250 billion rupees so far in this financial year.

Indian states will raise 14 billion rupees via an auction today. New Delhi will raise 200 billion rupees via Treasury Bills tomorrow and 170 billion rupees of bonds via an auction on May 24. The auction includes 60 billion rupees of the benchmark paper.