Rupee remains under pressure ahead of MPC decision; opens flat at 88.78/$

Indian Rupee today: The domestic currency opened one paise higher at 88.78 on Wednesday against the greenback

The Indian Rupee continued to remain under pressure near its record lows on Wednesday as traders gear up for the Reserve Bank of India's (RBI) monetary policy decision.  

 

The domestic currency opened one paise higher at 88.78 on Wednesday against the greenback, according to Bloomberg. The currency fell 3.62 per cent so far this year, while it hit an all-time low of 88.80 on Tuesday. 

 

The rupee has depreciated by 3.7 per cent so far in the current financial year after starting on a good note in April.

 

The currency closed at its lowest yesterday and is set to open at its lower on Wednesday unless the central bank has other ideas, on a day when the US is in a shutdown mode and the RBI is releasing its policy decision, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. "The US-India trade tensions, with no solutions forthcoming, are keeping the rupee in a weak mode with FPI buyers and 89.00 now in sight." 

 

The Monetary Policy Committee (MPC) is expected to maintain the status quo at its October meeting, according to a Business Standard poll. The domestic rate-setting panel kept the repo rate unchanged in August, following a 50-basis-point (bp) cut in June. Earlier, the panel had reduced the rate by 25 bps each in February and April after holding it steady for 11 consecutive meetings.  

 

President Trump’s persistent pressure on India’s Russian oil purchases has weighed on the rupee as well as equity market sentiment, making India one of the worst-performing markets in both currencies and stocks, Bhansali said. The Reserve Bank of India’s (RBI) intervention has so far been limited to curbing volatility, but the broader trend remains negative amid strong dollar demand and a cautious outlook on India’s macroeconomic fundamentals, he said. 

 

Meanwhile, the dollar index traded slightly higher amid concerns that US shutdown fears could delay the release of Friday’s nonfarm payrolls data. The measure of the greenback against a basket of six major currencies was up 0.05 per cent at 97.82.

 

In commodities, crude oil prices rose after two days of losses as investors weighed the prospect of an Opec+ output hike against shrinking US crude inventories. Brent crude price was up 0.17 per cent at 66.14 per barrel, while WTI crude prices were higher by 0.14 per cent at 62.46 per barrel, as of 9:00 AM IST.