The rupee fell to a record low against the US dollar in early trade on Tuesday in muted trade as participants largely stayed on the sidelines ahead of the RBI’s policy decision later this week.
On the interbank forex market, the rupee opened at 77.71 against the US dollar after slipping 5 paise.
On Tuesday, share markets also plunged in the red. The Sensex fell 0.90 per cent or 499.81 points at 55,175.51, and the Nifty 50 slipped 0.86 per cent or 141.75 points at 16,427.80.
The rupee closed at 77.66 against the American currency on Monday.
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On Monday, while the domestic unit gained initially amid a weak American currency in the overseas market, elevated crude oil prices, unabated foreign capital outflows and subdued domestic equities capped the appreciation bias, forex dealers said.
Meanwhile, the RBI’s rate-setting panel MPC on Monday began its three-day deliberations amid expectations of another hike in benchmark interest rates to contain inflation that continues to remain above the central bank’s upper tolerance level.
RBI Governor Shaktikanta Das will announce the decision of the Monetary Policy Committee (MPC) on Wednesday.
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“Rupee continued to trade in a narrow range and marginal weakness was seen ahead of the RBI policy meeting that is scheduled this week. Expectation is that the central bank could look to raise rates but investors will be keenly watching governor’s commentary. The central bank could continue to maintain a hawkish stance, thereby restricting major losses for the rupee,” said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“We expect the USDINR to trade with sideways and quote in the range of 77.40 and 78.05,” he added.
Dilip Parmar, Research Analyst, HDFC Securities, said the rupee remained in a narrow range with thin volumes ahead of the RBI policy decision.
“The market is already set for a rate hike as the 10 year benchmark bond yields settled at 7.5 per cent. Spot USD-INR is yet to give a four week range of 77.40 to 77.80. Near term bias remains cautious ahead of policy decisions,” he noted.
