Indian rupee strengthens ahead of RBI's monetary policy decision

The rupee was at 22.589 as of 8.05am, up by 0.08 per cent compared with its close of 22.606 against the UAE dirham in the previous session

By Reuters

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Image used for illustrative purpose. Photo: File
Image used for illustrative purpose. Photo: File

Published: Thu 8 Feb 2024, 10:39 AM

Last updated: Thu 8 Feb 2024, 10:41 AM

The Indian rupee gained on Thursday, aided by better risk appetite amid a pause in the dollar's recent rally, with traders awaiting cues from the Reserve Bank of India's (RBI) monetary policy decision.

The rupee was at 22.589 as of 8.05am, up by 0.08 per cent compared with its close of 22.606 against the UAE dirham in the previous session.

The dollar index was little changed at 103.98 against the US dollar while most Asian currencies were rangebound save for the Indonesian rupiah, which rose 0.6 per cent.

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All but one of the 60 economists polled by Reuters expect the central bank to hold the repo rate at 6.50 per cent.

The rupee is unlikely to "see much movement ahead of the RBI decision," a foreign exchange trader at a private bank said, while adding that a status quo on rates and policy stance may support a slight upward bias.

Broadly, the rupee is expected to remain between the 82.70 and 83.30 levels, with levels above 83.00 deemed a selling zone (on the dollar-rupee pair), Amit Pabari, managing director at FX advisory firm CR Forex said.

Meanwhile, US Federal Reserve policymakers pushed back on expectations of early rate cuts again on Wednesday.

"There's still a reasonable amount of uncertainty" on inflation, Richmond Fed President Thomas Barkin said. "I am waiting to get more clarity on that before declaring anything more on what we do on the policy side."

Chances of the Fed keeping rates unchanged at its May meeting have risen to 32.5%, up from about 5% at the end of January, according to CME's FedWatch tool.

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