Mumbai, Oct 6 (PTI) The rupee declined 2 paise to settle at 83.27 against the US dollar on Friday after the Reserve Bank kept the repo rate unchanged in its fourth consecutive monetary policy review.
Unabated foreign fund outflows and elevated levels of the greenback pressured the local unit, according to forex traders.
However, a rally in the domestic equity markets supported the domestic currency and restricted the fall, they added.
At the interbank foreign exchange, the domestic unit opened at 83.21 against the dollar and traded between a high of 83.28 and a low of 83.18. It finally settled at 83.27 against the dollar, down 2 paise over Thursday’s closing level of 83.25.
“The rupee traded in a range 83.18-83.25 as RBI policy kept Repo rates unchanged at 6.50 per cent with the removal of accommodation stance in a phased manner keeping sentiments positive for Indian growth, as RBI governor pointed out that India is showing resilience in de-growth in a time when the global market is facing high inflation and growth uncertainties.
“Markets cheered the statement as financial and NBFCs saw smart recovery. The rupee got support from the weak dollar as the dollar drifted lower towards 106 before the important unemployment & non-farm payroll data. Rupee range stays between 82.75-83.40,” According to Jateen Trivedi, VP Research Analyst at LKP Securities.
The six-member monetary policy committee of the Reserve Bank of India on Friday held the benchmark repurchase rate (repo) at 6.50 per cent in a unanimous decision for the fourth policy review meeting in a row.
Noting that inflation remains a risk, the RBI also signalled that it would keep liquidity tight by using bond sales to bring prices closer to the target.
“According to the RBI, Indian economic activity has shown resilience, and the overall macroeconomic indicators remain favourable with strong manufacturing and services PMI numbers. GDP and CPI inflation projections too were maintained,” Anuj Choudhary, Research Analyst at Sharekhan by BNP Paribas, said.
He further said that positive domestic markets and a decline in crude oil prices supported the rupee. Also, the softness of the US dollar may support the domestic currency.
“A no-surprise monetary policy by the RBI may also support the domestic currency. However, FII outflows may cap a sharp upside. Traders may take cues from US non-farm payrolls reports, average hourly earnings and unemployment rate data. USD/INR spot price is expected to trade in a range of Rs 82.80 to Rs 83.70,” Choudhary added.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.02 per cent lower at 106.31.
Brent crude futures, the global oil benchmark, were 0.08 per cent up at USD 84.14 per barrel.
On the domestic equity market front, the 30-share BSE Sensex ended 364.06 points, or 0.55 per cent, higher at 65,995.63, while the broader NSE Nifty advanced 107.75 points, or 0.55 per cent, to 19,653.50.
Foreign institutional investors remained net sellers in the capital market on Friday, offloading shares worth Rs 90.29 crore, as per stock exchange data. PTI HVA BAL BAL
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