Finance
After the RBI decided to keep the key benchmark policy rate at 6.5 percent, the rupee pared initial losses and settled 2 paise lower at 81.92 (provisional) against the US dollar on Thursday.
The Indian rupee experienced volatility, according to forex traders, after the Reserve Bank of India (RBI) surprised the market by pausing the rate hike.
At the interbank foreign exchange, the domestic unit opened weak against the dollar at 81.95 and finished the day at 81.92 (provisional), 2 paise lower than its previous close.
The rupee gained 42 paise against the US dollar on Wednesday, closing at 81.90.
The Reserve Bank of India (RBI) decided on Thursday to maintain the key policy rate at 6.5 percent, despite inflation exceeding the RBI’s tolerance level. The rate increase has been paused following six consecutive rate increases totaling 250 basis points since May 2022.
On the rupee, Reserve Bank Governor Shaktikanta Das stated that the Indian Rupee moved in an orderly manner in 2022 and will continue to do so in 2023.
This reflects the strength of domestic macroeconomic fundamentals as well as the Indian economy’s resilience to global spillovers.
The RBI remains vigilant and focused on maintaining the Indian rupee’s stability, he added.
According to Dilip Parmar, Research Analyst, HDFC Securities, the local unit initially declined but strengthened following recovery in the domestic equities backed by foreign fund inflows, Parmar said.
“With today’s pause, the carry trade is back in the rupee. The spread between India’s bond yield premium over the US makes the rupee more attractive as a carry target,” Parmar noted.
In the near-term, spot USDINR is expected to trade between 81.70 to 82.50 with a bearish bias, Parmar said.
Meanwhile, the dollar index, which measures the strength of the US currency against a basket of six currencies, increased 0.08 percent to 101.93.
Brent crude futures fell 0.16 percent to USD 84.85 per barrel, the global oil benchmark.
The 30-share BSE Sensex closed 143.66 points, or 0.24 percent, higher at 59,832.97 points in the domestic equity market. The NSE Nifty rose 42.10 points, or 0.24 percent, to 17,599.15 points.
According to exchange data, Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Wednesday, purchasing shares worth Rs 806.82 crore.
Source:FE
