Rupee Flattens As RBI Holds Interest Rate Steady

The Indian rupee turned flat after opening stronger as Reserve Bank of India's Governor Shaktikanta Das announced that the MPC held the interest rate steady at 6.5% while changing the stance to 'neutral'.

The currency traded steady at 83.95 after it opened 4 paise stronger at 83.92 on Wednesday.

It had closed at 83.96 on Tuesday, according to Bloomberg data.

Meanwhile, the dollar index remained flat at 102.5510, while Brent crude oil prices edged up by 0.13% to $77.28 per barrel, as market participants awaited updates from the Middle East and the latest US inventory data.

"Though the RBI is unlikely to cut rates in today's policy announcement, it may be setting the stage for potential cuts in February 2025. However, inflationary expectations may prevent any rate cuts today," Anil Kumar Bhansali, Head of Treasury and Executive Director at Finrex Treasury Advisors LLP, said earlier in the day.

Bhansali added that the rupee remained highly stable on Tuesday, likely due to warnings from the RBI to banks against short rupee positions. "The currency moved within a narrow range ahead of the monetary policy decision," he noted.

Bhansali expects the rupee to trade in a range of 83.85 to 84.05 during trade on Wednesday. "Exporters may sell on upticks, with the RBI likely to defend the 83.99 level, while importers are advised to buy on dips with a stop loss at 84.02 for unhedged positions," he said.