MUMBAI - The Indian rupee is likely to hold an 81-to-84 range against the U.S. dollar in the next quarter, with the Reserve Bank of India continuing to play a pivotal role in managing volatility, a top treasury official at BNP Paribas told Reuters.

The rupee has been in a range of 80.88-82.94 so far this year, likely helped by the RBI's interventions. The central bank governor said earlier this month that the rupee was one of the least volatile Asian currencies last year and remains so.

The RBI has bolstered its foreign exchange reserves when the rupee has rallied and sold dollars when required to prevent the local currency from falling near its record-low of 83.30, according to several market participants.

The central bank will continue to do so and, in the process, dampen volatility, Ashutosh Tikekar, head of global markets at BNP Paribas India, said on Friday.

"Essentially, the RBI plays a critical role. Unless there is a massive dollar-strength story or a big equities selloff coupled with U.S. rates moving higher, we feel the RBI will look to smoothen excess volatility on either side," Tikekar said.

"So, we are at 81 to 84 for the next quarter."

BNP has a year-end target of 80 to the dollar.

Tikekar reckons that one of the important variables for the rupee this year will be that the dollar index-strength story "will go away" and the dollar will weaken against its major peers.

This, he believes, will happen as the correlation between the U.S. Federal Reserve's rate hikes and the dollar "will be weaker and weaker" to the extent that the currency's strength will "not be proportionate" to rate hikes.

He expects emerging market currencies "in general" to strengthen.

BOND YIELDS SEEN RANGEBOUND

Tikekar also believes that India's 10-year government bond yield will not deviate significantly from the current levels, of 7.36%, despite persistent worries about inflation.

"I think the 10-year will be around 7.25-7.50% for the time being."

"There is no reason for the RBI to move (interest rates) beyond 6.75% unless inflation goes out of control totally. The market is not positioning for that kind of surprise."

The RBI raised the repo rate to 6.50% on Feb. 8.

After a bigger-than-expected jump in domestic inflation last month, some economists now expect the central bank to raise rates once more, by 25 basis points, in April.

(Reporting by Nimesh Vora; Editing by Savio D'Souza)