Rupee recovers 6 paise against US dollar ahead of RBI policy

Rupee vs US dollar: On Thursday, the rupee closed 0.33% down from its previous close of 73.58/$, marking its third straight session losses,

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Manish Wadhawan, MD and head of fixed income, HSBC India, believes that the rupee at 74.50 would face a stiff resistance.

The Indian rupee opened slightly lower on Friday at 73.64 per US dollar against its Thursday’s close at 73.58/$, but shortly made a recovery and was trading at 73.52 in morning trading, 6 paise higher from the previous close, ahead of the Reserve Bank of India’s policy decision, which is due today.

On Thursday, the rupee closed 0.33% down from its previous close, marking its third straight session losses, the Bloomberg data showed. India’s 10-year government bond yield stood at 8.13% against Thursday’s 8.15%.

It may be noted that today’s RBI’s monetary policy committee (MPC) decision is very important for the financial markets. The Indian currency, since the last meeting, has depreciated by 7%, crude has rallied, the US Fed has hiked rates, domestic liquidity has tightened, the government has reduced borrowing for the second half of the fiscal amid falling GST revenue.

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“Today USDINR likely to remain in the range of 73.42 (stretched 73.22) to 74.03 (stretched 74.44). Dollar remains elevated as U.S. Treasury Bond Yields hit seven-year high. Dollar Index presently at 95.82, US 10Y Bond yield at 3.20%. Recent good economic data coming out from U.S. is endorsing the interest rate guidance set by FED. Today Non-Farm Payroll is due to be released, where its expected to be better than forecasted. If actual does come out better, it can further lift the Dollar,” said Hiren Sharma, Portia Advisory Services LLP.

“Major currencies have been reeling owing to Dollar & yield rise, and coupled with higher Crude prices it has pressured the emerging currencies & equities as well,” Sharma said, adding that rupee remains in a critical zone, unless Dollar-Crude-Yields cool off.

Meanwhile, stocks markets opened on a negative note with Sensex of the BSE falling 330 points to hit an intra-day low of 34831.95 points in opening trade on Friday. Also, the Nifty index lost 1% in opening trade deals and scaled a low of 10,447.95 points. OMCs shares tanked up to 26% in opening trade.

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