Rupee Appreciates 7 Paise to 84.64 Against US Dollar Ahead of RBI’s Monetary Policy Decision
The Indian rupee appreciated by 7 paise to 84.64 against the US dollar in morning trade on Friday, bolstered by fresh foreign fund inflows, although muted trends in domestic equities kept the domestic unit in check. Forex traders noted that investor sentiment was supported by inflows, but a cautious mood prevailed due to the wait for cues from the Reserve Bank of India’s (RBI) monetary policy decision, scheduled for later in the day.
At the interbank foreign exchange market, the rupee opened at 84.66 and moved within a narrow range before touching 84.64, registering a gain over its previous close of 84.71. On Thursday, the rupee had recovered from its all-time low, settling with a modest gain of 4 paise.
“The rupee is expected to show slight strength after the RBI intervened by selling dollars at 84.75, maintaining stability in the range of 84.70-84.75. With the RBI’s policy announcement in the backdrop of a weaker currency and stronger markets, the rupee is likely to trade between 84.60 and 84.80,” said Anil Kumar Bhansali, Head of Treasury at Finrex Treasury Advisors LLP.
Market participants are closely watching the RBI’s bi-monthly monetary policy, with expectations of the central bank holding interest rates steady. Retail inflation remains above the upper tolerance limit, prompting the RBI’s six-member Monetary Policy Committee, headed by Governor Shaktikanta Das, to deliberate on its next move.
While the market has priced in no rate cut for the 11th consecutive time, Bhansali cautioned that the RBI could surprise the market with a rate cut, the first since May 2020.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.06 percent at 105.78. Brent crude oil prices were slightly lower, falling by 0.04 percent to USD 72.06 per barrel in futures trade.
On the domestic equity front, the Sensex was trading 34.02 points, or 0.04 percent higher, at 81,799.88 points, while the Nifty gained 6.85 points, or 0.03 percent, to 24,715.25 points.
Foreign Institutional Investors (FIIs) remained net buyers in the capital markets, purchasing shares worth Rs 8,539.91 crore on Thursday, according to exchange data.
