Rupee Closes Stronger Against US Dollar As Markets Eye Fed Rate Announcement
On Monday, the local currency opened flat at Rs 83.90 against the US dollar, according to Bloomberg. It had closed at Rs 83.90 on Friday.
Indian Rupee notes. (Source: Vijay Sartape/NDTV Profit)
The Indian rupee strengthened against US dollar on Monday as traders await the outcome of the Federal Open Market Committee's decision on interest rates on Wednesday.
On Monday, the local currency appreciated two paise to close at Rs 83.88 against the US dollar, according to Bloomberg. It had closed at Rs 83.90 on Friday.
Until last week, most believed a 25 basis-point reduction was likely. But with the release of the latest personal consumption expenditures data, market sentiment has shifted. The CME FedWatch Tool now reflects a 59% probability of a larger 50-bp cut at the Fed meeting, according to CR Forex Advisors.
Oil prices rose in early trade in line with rate cut forecasts but were limited by U.S. supply resuming following Hurricane Francine and poor Chinese data.
The US dollar stood at 100.86, a 0.25% decline.
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"The forex reserves of India grew by $5.2 billion to fresh record all time high of $689.24 billion which will create an external sector reliance and boost economy across sectors," said Anil Kumar Bhansali, Head of Treasury and Executive Director of Finrex Treasury Advisors LLP.
He added that the substantial reserves will provide RBI greater flexibility in monetary policy and currency management. "It will also help in economic growth trajectory by strengthening it's position internationally, drawing in foreign investment and promoting domestic trade and industry," he said.
Bhansali expects the rupee to trade in Rs 83.85 to 83.05 range on Monday with exporters on the watchful side for hedging with stop loss at 83.75. Importers are advised to buy dollar dips or trigger a stop loss of Rs 84.02.
