The rupee opened stronger against the US dollar as market participants await the outcome of the Reserve Bank of India's Monetary Policy Committee. The currency opened 13 paise stronger at 89.85 against the greenback.
Traders are divided in expectations of a rate cut and a pause from the MPC committee amid high GDP growth and lower inflation. Some traders expect a pause because they believe the central bank will wait for the US Federal Reserve' move next week to assess the external situation well before any step.
Governor Sanjay Malhotra's commentary will also be crucial for fresh cues about the central bank's policy meeting.
Track live updates on RBI MPC meet here.
The Indian currency settled at 89.98 on Thursday. During the session, the rupee slumped 42 paise to a record low of 90.42 against the greenback as the dollar demand surged amid foreign fund outflows and uncertainty about the US and India trade deal.
Analysts' Take
The USDINR pair touched the upper channel near 90.50 and pulled back, showing a pause after the sharp rise. The pair is steady below 90, with support at the 89.60 and then 89.10–88.80. The trend stays positive above the 20-day line, but the rejection from the channel top signals some cooling in momentum, said Ritesh Bhanshali, director, Mecklai Financial Services Ltd.
IFA Global expects the rupee to trade a 89.80-90.20 range against the US Dollar with sideways price action. Forwards will be driven by RBI policy. If a rate cut is seen, we may see forwards get received. three-month, one-year and five-year implied forward yields are at 2.59%, 2.52% and 3.39% respectively, Founder Abhishek Goenka
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
