Mumbai: India’s rupee saw a marginal dip of 10 paise in early trading on Wednesday, reaching 96.45 against the US dollar, as markets anticipated the Reserve Bank of India’s (RBI) upcoming monetary policy announcement.
Information was available with The Chenab Times indicating that the rupee has been under consistent pressure, influenced by sustained outflows of foreign funds from the domestic equity markets and a strong US dollar index, which hovers near multi-month highs above 102.
Forex traders noted that investor sentiment remains cautious, with all eyes on the RBI’s policy decision for further direction. The rupee had commenced trading at 96.37 against the dollar before weakening to 96.45, marking a 10-paise decline from its previous closing value of 96.35.
Analysts suggest the RBI might implement a rate hike of 25 basis points, with a possibility of a 50 basis point increase. Additionally, the central bank may raise the Cash Reserve Ratio (CRR) by 1 per cent to 4 per cent to manage excess liquidity in the financial system. The RBI’s stance on the depreciating rupee, which has lost over 2 per cent in the last month largely due to oil demand and foreign portfolio investor (FPI) demand for the US dollar, is keenly awaited.
The Reserve Bank of India is scheduled to announce its bi-monthly monetary policy decision at 10:00 AM on Wednesday. Several experts anticipate a potential rate hike, the first in nearly three-and-a-half years, amid rising inflation concerns, exacerbated by the ongoing conflict in West Asia. The RBI last adjusted the repo rate in February 2023, increasing it by 0.25 per cent to 6.50 per cent. Following this, the rate remained unchanged throughout 2023-24 before the commencement of its rate-cut cycle in 2025. The current policy repo rate stands at 5.25 per cent.
The dollar index, a measure of the US dollar’s strength against a basket of six major currencies, was observed trading 0.19 per cent higher at 102.02. Concurrently, Brent crude, the global oil benchmark, experienced a rise of 0.91 per cent, trading at USD 101.50 per barrel in futures trade.
In domestic equity markets, both the benchmark Sensex and Nifty indices opened lower. The Sensex fell 460 points to trade at 72,599.05 in early morning trade, while the Nifty declined by 164.80 points to reach 22,610.85.
Data from the exchanges revealed that Foreign Institutional Investors (FIIs) were net sellers on Tuesday, offloading equities worth Rs 2,961.30 crore.
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The Chenab Times News Desk
