A vendor holds Indian rupee notes at his store in the Dadar wholesale flower market in Mumbai (Photographer: Dhiraj Singh/Bloomberg)

Rupee Rises To Two-Week High Ahead Of Policy Rate Outcome

The Indian Rupee made a spirited comeback ahead of a key policy rate decision tomorrow as it closed at a two-week high against the U.S. Dollar.

Rupee gained 13 paise to close at 68.54 against the greenback on expectations that the U.S. Fed is likely to keep rates unchanged. Notwithstanding initial listlessness, the currency staged a recovery towards the tail-end trade despite heavy month-end dollar demand from importers and corporates.

A rally in domestic equities further supplemented the recovery momentum. India’s Monetary Policy Committee (MPC) will meet tomorrow for the third bi-monthly policy statement.

A bearish dollar overseas also influenced the trading sentiment. The dollar index was down 0.10 percent at 94.2. The U.S. Fed is set to start its two-day policy meeting tonight and is widely expected to keep benchmark interest rate unchanged.

Earlier, the Indian currency opened lower at 68.70 from overnight level of 68.67 at the Interbank Foreign Exchange market, The rupee had settled lower by 2 paise yesterday. The Financial Benchmarks India Private Limited (FBIL), meanwhile, fixed the reference rate for the dollar at 68.6068 and for the euro at 80.3687.

The bond market also rebounded and the 10-year benchmark yield ended lower at 7.77 percent.

Cross-Currency Trade

  • Rupee fell against the Pound Sterling to 90.21 from 90.05
  • Rupee against the Euro settled at 80.47 from 80.22 earlier
  • Against the Japanese Yen, the rupee bounced back to 61.5 per 100 yens