Indian rupee opened marginally higher against the US dollar on Thursday ahead of the Reserve Bank of India’s (RBI) monetary policy announcement. The local currency opened 2 paise higher at 83.94 per dollar as against its previous close of 83.96.
The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was down at 103.06.
On Wednesday, rupee weakened to all-time low, hurt by the continued unwinding of carry trades and on dollar demand from local importers. The rupee fell to its record low of 83.9725 to the dollar before closing at 83.9550, its weakest closing level ever.
Asian currencies were mixed on the day with the Japanese yen rising slightly to 146.50 to the US dollar. The volatility on the yen, spurred possibly by the unwinding of carry trades, has been a worry for world markets, Reuters reported.
The RBI is expected to keep the key repo rate unchanged at 6.50%, while some of the economists are forecasting a change in stance. The focus will be on RBI Governor Shaktikanta Das’ comments on liquidity, which right now is in a sizeable surplus.
Weakness in Indian stock market, outflow of foreign funds and gains in crude oil prices may weigh on Indian rupee.
“RBI’s vigilant interventions have managed to anchor the rupee, preventing it from breaching the 84.00 level. Investors must carefully navigate their hedging strategies as global factors continue to shape market dynamics. In the near term, the rupee is projected to oscillate within a narrow band of 83.80 to 84.05, with a slightly broader range of 83.90 to 84.20 expected in the medium term,” said Amit Pabari, Managing Director at CR Forex Advisors.
Indian stock market opened flat ahead of the RBI policy amid weakness in global equities.
The Sensex opened 47.52 points, or 0.06%, lower at 79,420.49, while the Nifty 50 opened down by 48.95 points, or 0.2%, at 24,248.55.
On Wednesday, Foreign institutional investors (FIIs) net sold Indian shares worth ₹3,314.76 crore, while Domestic Institutional Investors (DIIs) net purchased shares to the tune of ₹3,801.21 crore, as per provisional data available on the exchanges.
(With inputs from Reuters)
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