Rupee closes flat against US dollar ahead of RBI decision
Mumbai: The Indian rupee on Tuesday closed little changed against US dollar ahead of the decision of Reserve Bank of India’s (RBI) bi-monthly policy.
The home currency closed at 64.38 a dollar, down 0.02% from its Monday’s close of 64.38. The rupee opened at 64.34 a dollar, and touched a high and a low of 64.23 and 64.46 respectively.
Most of the analysts polled by Mint expect the central bank to keep interest rates on hold for a prolonged period starting with its policy meeting on concerns of rising inflation.
All 15 economists surveyed expect the central bank’s monetary policy committee (MPC) to keep the key repo rate—the rate at which it infuses liquidity in the banking system—unchanged at 6% when it announces its decision on Wednesday.
“We expect RBI to sit tight on the monetary policy, with no rate move expected for at least the next two quarters. In fact, there’s a possibility of the central bank adopting a relatively hawkish tone given the sharp liquidity dip in banking, growing inflation and concerns of fiscal slippage”, said Amar Ambanai, partner and head of research, IIFL Investment Managers.
The benchmark Sensex fell 0.20%, or 67.28 points, to 32,802.44. So far this year, it has gained 23.45%.
The 10-year bond yield ended at 7.061%, compared to its previous close of 7.083%. Bond yields and prices move in opposite directions.
So far this year, the rupee has gained 5.4%, while foreign institutional investors have bought $8.75 billion and $22.59 billion in equity and debt, respectively.
Asian currencies were trading higher. South Korean won was up 0.28%, Singapore dollar 0.15%, China renminbi 0.11%, Taiwan dollar 0.09%, Hong Kong dollar 0.07%, Indonesian rupiah 0.06%, Thai baht 0.05%. However, Malaysian ringgit was down 0.09%.
The dollar index, which measures the US currency’s strength against major currencies, was trading at 93.114, down 0.08%, from its previous close of 93.114.
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