Rupee holds steady ahead of RBI policy decision on rate hike
The Indian rupee started the day unchanged against the US dollar on October 7, holding steady at 96.42 per dollar, the same as the previous close. Investors are closely watching the Reserve Bank of India's (RBI) monetary policy announcement, which could include the first interest rate hike in over three years. The market anticipates a 25 basis points increase, with a slight possibility of a 50 basis points rise, along with a potential 1% increase in the cash reserve ratio (CRR) to manage excess liquidity.
Oil prices rose to $101.50 per barrel due to a refinery explosion in Venezuela and attacks in the Strait of Hormuz, adding pressure on the rupee. The currency has weakened by more than 2% over the past month, influenced by oil demand and foreign portfolio investor (FPI) demand for dollars. Exporters are expected to sell dollars on price upticks, while importers may buy during dips to 96.00, as oil prices remain above $100.
Asian currencies showed mixed performance against the US dollar, with the Indonesian rupiah leading gains, followed by the South Korean won and Chinese renminbi. The Japanese yen was the weakest, falling 0.221%, while other regional currencies like the Philippine peso, Thai baht, Taiwan dollar, Malaysian ringgit, and Singapore dollar also declined marginally. The US dollar softened on Wednesday as European bond market stress eased, and attention shifted to the Federal Reserve's policy signals.