Rupee Marginally Weakens Against US Dollar Amid Market Anticipation for RBI Policy

Rupee Marginally Weakens Against US Dollar Amid Market Anticipation for RBI Policy

VoM News Desk | December 5, 2023 | 10:45 AM IST | Breaking News | Follow on Google News

Rupee Marginally Weakens Against US Dollar Amid Market Anticipation for RBI Policy

Rupee Marginally Weakens Against US Dollar Amid Market Anticipation for RBI Policy

In early trading on Tuesday, the Indian rupee experienced a slight decline, dropping 4 paise to trade at 83.41 against the US dollar. This movement in the forex market is attributed to the increased demand for the American currency among importers. Opening at 83.38 against the dollar, the rupee showed a minor shift from its previous close of 83.37.

Forex traders are closely monitoring the upcoming monetary policy outcome from the Reserve Bank of India (RBI). The central bank’s Monetary Policy Committee is set to commence its bi-monthly review meeting on Wednesday, with the decision expected to be announced on Friday. This anticipation has led to a cautious approach in the forex market, contributing to the rupee’s marginal movement.

Dollar Index and Domestic Indices Overview

The dollar index, which compares the US dollar against six major currencies, showed a slight decrease of 0.09%, standing at 103.62. Despite the rupee’s slight drop, domestic benchmark equity indices, such as the Sensex and Nifty 50, recorded gains, closing at record high levels on Monday.

Gaurang Somaiya, a forex and bullion analyst at Motilal Oswal Financial Services, anticipates continued volatility in the market, particularly in light of upcoming economic data releases from the US. Domestically, the focus remains on the RBI’s policy statement, with expectations that the central bank may maintain the current rates. Somaiya predicts a trading range for the USD-INR spot between 83.20 and 83.50, contingent upon various economic indicators, including the services PMI number.

Global Oil Benchmark and Foreign Institutional Investment

Brent crude futures, the global oil benchmark, saw a minor dip of 0.03%, settling at $78.01 per barrel. In terms of foreign institutional investment, the capital market observed net buying, with purchases amounting to ₹2,073.21 crore on Monday, according to exchange data. This foreign investment activity reflects a positive sentiment in the Indian market, despite the minor fluctuations in the forex domain.

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