Rupee trades in a narrow range against U.S Dollar in early trade
The rupee traded in a narrow range in the morning trade on Wednesday, as the support from positive domestic equities was negated by the strengthening of the American currency in the overseas market. At the interbank foreign exchange market the local unit opened at 83.86 but soon pared the gains to trade at 83.92, unchanged from its previous close. The local unit had slumped 37 paise to settle at an all-time low of 84.09 against the US dollar on Monday. The Indian rupee is expected to open at 83.91 after a fall of 83.96. On Tuesday with dollar demand gaining traction RBI selling dollars to keep the rupee within 84 levels said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP. Forex traders said risk aversion in the global market escalation of geopolitical tensions in the Middle Feast and outflows by foreign investors further dented investors’ sentiments. Foreign Institutional Investors ( FFIs) were net sellers in the capital market on Tuesday as they offloaded shares worth RS 3,531, 24 crore according to exchange data. The fed will likely support the USD by pushing back in the market’s aggressive bet for 100 bps of cuts in the remaining three FOMC meetings this year, DBS Bank said in a note.
Meanwhile, the Reserve Bank rate-setting panel started its three-day deliberations for the next set of bi-monthly monetary policy on Tuesday amid expectations of no change in benchmark interest rate in view of concerns on inflation and economic growth.
When traders and investors have a balanced outlook on the economic prospects of both countries, it leads to a stable trading environment. Regular economic indicators such as GDP growth rates, inflation, employment data, and trade balances impact currency values. The decision of RBI Governor Shaktikanta Das – who headed the member monetary policy committee (MPG ) will announced on Thursday.
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