This Article is From Oct 09, 2020

Rupee Edges Higher To 73.13 Against Dollar After RBI Policy Action

Rupee Dollar Forex Rate Today: The rupee moved within a 24-paise range, between 73.02 and 73.26, against the dollar, having begun the day mildly stronger at 73.18 compared to its previous close of 73.24.

Rupee Edges Higher To 73.13 Against Dollar After RBI Policy Action

Rupee Vs Dollar: The rupee is down 2.45% against the dollar so far this year

Rupee Vs Dollar Today: Extending gains to a third straight day, the rupee edged higher to close at 73.13 against the US dollar on Friday after the Reserve Bank of India maintained a status quo on key policy rates and said it remained committed to its "accommodative" stance for as long as necessary to revive the economy. That marked a second straight pause on benchmark rates, amid elevated levels of inflation and weakness in the economy, which shrank 23.9 per cent in April-June period - its worst contraction on record.  

The rupee moved within a 24-paise range, between 73.02 and 73.26, against the dollar, having begun the day mildly stronger at 73.18 compared to its previous close of 73.24.

The RBI's action was along expected lines with a dovish commentary of its Monetary Policy Committee, according to analysts.

"The Monetary Policy Committee overlooked current elevated inflation prints, viewing them as transient... The rupee had appreciated... but nationalised banks stepped in at lower levels to support the USD-INR (pair)," said Abhishek Goenka, founder and CEO of forex advisory firm IFA Global.

The Reserve Bank of India (RBI) assured bond markets on Friday that it stands ready to take whatever measures are necessary to ensure adequate liquidity in the banking system, sparking a sharp rally. The benchmark 10-year bond yield dropped as much as 10 basis points to 5.92 per cent.

The central bank also said it will conduct on-tap long-term repo operations, open market purchases of bonds and special open market operations (S-OMOs), and also provide the increased held-to-maturity limit to banks until March 2022 versus March 2021.

Crude oil prices eased but were on course for their biggest weekly gains since early June, amid supply cuts caused by a storm in the Gulf of Mexico and a strike of offshore workers in Norway. Brent crude futures - the global benchmark for crude oil - were last seen trading 0.60 per cent lower at $43.08 per barrel, having earlier declined to as low as $42.85 per barrel.

The dollar index - which measures the greenback against six other currencies - weakened as much as 0.34 per cent during the session to its lowest level recorded in nearly three weeks. The Japanese yen was last seen trading 0.16 per cent against the dollar, while the Chinese yuan was up 1.37 per cent, and the Singaporean dollar up 0.27 per cent.

"The rupee registered its second consecutive weekly gain on the back of weakness in dollar index and an unabated rally in domestic equities," said Sugandha Sachdeva VP-metals, energy and currency research, Religare Broking. The rupee ended the week marginally higher, following a gain of 47 paise - or 0.64 per cent - last week. 

"With rekindled hopes of a trimmed down, targeted US fiscal stimulus plan, there have been persistent portfolio inflows pouring in," she said.

At the current level, the rupee has recovered 4.91 per cent from an all-time low of 76.91, registered in April, but is still down 2.45 per cent for the year so far.

"Going ahead, the rupee looks poised to appreciate further, but the level of 72.80 mark is likely to cap gains. On the other hand, the level of 73.80 will act as a strong support for the local unit. We believe that the trajectory of the dollar index will keep steering the movement of the local unit," added Ms Sachdeva of Religare.