The rupee's edges rise 8 paise to USD; RBI policy is in focus
Mumbai, December 2 () The Indian rupee on Monday closed 8 countries higher at 71.66 against the US dollar in the midst of the participants hoping that the Reserve Bank will go to another rate cut at the meeting of RBI policy review to be held this week.
Forex traders said the national currency opened weakly as investors traded cautiously after India's second-quarter GDP growth fell to a minimum of more than six years of 4.5 percent, but during the day , the local unit was strengthened by anticipating greater relaxation in key rates to boost the economic slowdown.
In the interbank exchange rate, the rupee opened weakly at 71.78 per dollar, but soon strengthened to touch a maximum of 71.62 before finally settling at 71.66, an increase of 8 countries at its last close.
The Indian unit closed on Friday at 71.74 against the US dollar.
The rupee opened on a flat note, but was pressured by a weaker than expected GDP and fiscal number that were published on Friday, said Gaurang Somaiyaa, currency and bullion analyst at Motilal Oswal Financial Services Private Ltd.
India's GDP growth reached a minimum of more than six years of 4.5% in July-September 2019, mainly driven by the slowdown in manufacturing production and moderate activity in the agricultural sector, according to official data published on Friday .
This week, market participants will be attentive to the RBI policy statement and may consider reducing rates for the sixth time this year. We expect the USDINR (Spot) to trade in the range 71.70 and 72.20, Somaiyaa added.
Bankers and experts believe that the Reserve Bank can reduce interest rates for the sixth time in a row on December 5 to support the growth that has continued to decline.
The RBI has reduced interest rates on each occasion that the monetary policy committee (MPC) has met since Shaktikanta Das took over as governor last December.
The operators pointed out that the strengthening of the US dollar against other currencies abroad, the increase in crude oil prices and the sustained outflows of foreign funds weighed on the national currency.
The BSE indicator of 30 shares closed marginally higher at 8.36 points or 0.02 percent at 40,802.17. The index ranged from a maximum of 41,093.99 to a minimum of 40,707.63 during the day. On the other hand, the broader NSE Nifty stood at 7.85 points or 0.07 percent at 12,048.20.
Meanwhile, foreign institutional investors (FII) sold shares worth Rs 1,731.33 million on Monday, according to provisional exchange data.
The dollar index, which measures the strength of the dollar against a basket of six currencies, increased 0.06 percent to 98.33.
The Brent Futures crude oil benchmark index rose 2.33 percent to USD 61.90 per barrel.
The yield on 10-year government bonds was 6.49 percent in the morning trade. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.7255 and for the rupee/euro at 78.9750. The reference rate for the rupee/British pound was set at 92.6631 and for the rupee/100 Japanese yen at 65.51. DRR MKJ