Mumbai, Oct 07: The rupee depreciated 10 paise to 96.45 against the US dollar in early trade on Wednesday ahead of the Reserve Bank of India’s monetary policy decision.
The rupee is under continuous pressure amid persistent outflows of foreign funds from domestic equities and strong US dollar holding near multi-month highs above 102 (DXY), forex traders said.
Moreover, investors are keenly awaiting the RBI’s monetary policy decision for further cues.
At the interbank foreign exchange, the rupee opened at 96.37, then lost ground and fell to 96.45, down 10 paise from its previous close.
On Tuesday, the rupee settled at 96.35 against the US dollar.
“We have the RBI monetary policy meeting today, in which the RBI is expected to raise rates by 25 bps with an outside chance of a 50 bps raise. The RBI may also raise the CRR by 1 per cent to 4 per cent to absorb the excess liquidity.
“We await the RBI stance on the falling rupee which has lost more than 2 per cent in the last 1 month with oil demand and FPI demand for the US dollar keeping the rupee lower,” said Anil Kumar Bhansali, Head of Treasury and Executive Director, Finrex Treasury Advisors LLP, said.
The Reserve Bank of India will announce its bi-monthly monetary policy decision at 1000 hrs on Wednesday, with several experts expecting a rate hike after nearly three-and-a-half years as inflation pressures rise due to the continuing West Asia conflict.
The RBI last hiked the repo rate in February 2023, raising it by 0.25 per cent to 6.50 per cent. It kept the rate unchanged through 2023-24 before beginning its rate-cut cycle in 2025.
The RBI’s policy repo rate currently stands at 5.25 per cent.
Meanwhile, the dollar index, which gauges the strength of the greenback against a basket of six currencies, was trading at 102.02, higher by 0.19 per cent.
Brent crude, the global oil benchmark, was trading higher by 0.91 per cent at USD 101.50 per barrel in futures trade.
On the domestic equity market front, Sensex fell 460 points to 72,599.05 in early trade, while the Nifty declined 164.80 points to 22,610.85.
Foreign Institutional Investors (FIIs) offloaded equities worth Rs 2,961.30 crore on a net basis on Tuesday, according to exchange data. ( PTI )
