On Friday, the rupee consolidated in a narrow range. It settled lower by 2 paise at 83.38 (provisional) against the US dollar. This was done after the Reserve Bank of India decided to keep the policy rate at 6.5 percent.
According to Fox traders, strong American currency in the overseas markets, including a rebound in the price of crude oil, will weigh on investor sentiment.
At the interbank foreign exchange market, the opening of the local unit was done at 83.35, and later it settled at 83.38 (provisional) against the US dollar. This leads to a decline of 2 paise as compared to the previous close.
However, on Thursday, the Indian currency depreciated by 4 paise, which is to close at 83.36 against the dollar. The positive tone of the Reserve Bank of India’s governor and the domestic markets might support the Indian currency, the rupee, according to the traders.
The Monetary Policy Committee
The involvement of the Monetary Policy Committee involves six members. This consists of the main three RBIs and several external members. They voted unanimously to maintain the benchmark repurchase rate at 6.5 percent.
As compared to all of the penal members, only one penal member voted to maintain the policy stance of ‘withdrawal of accommodation’. This means that the rates should remain higher for longer. However, the Central Bank of India raised its concern for overall economic growth to around 7 percent as compared to 6.5 percent.
The governor even highlighted that ‘over-tightening’ can lead to growth risks to the economy. He even emphasized that the situation is not a signal that the policy stance is going in a neutral direction.
The Indian rupee closed on a flat note. This was after the RBI kept the same policy rate, according to market expectations, said Dilip Parmar, who is a research analyst at HDFC Securities. The rupee is going to remain resilient to any external shocks amid foreign fund inflows, the macro environment, or sustainable forex reserves.
Whereas the dollar index, which measures the greenback’s strength against the basket of around six currencies, was 0.23 percent higher at 103.78. Brent crude futures, the global oil benchmark, have advanced 2.27 percent to $75.73 per barrel.
When it comes to the domestic equity front, Sensex advanced to points 303.91 to settle at 69,825.60 points. As per exchange data, FIIS were net sellers on Thursday. They were net sellers in the capital markets, offloading shares worth around Rs. 1564.03 crore.
