Forex traders said an overall decline in the U.S. dollar and crude oil prices supported the rupee. However, weak domestic markets capped sharp gains. File
| Photo Credit: The Hindu
The rupee settled on a flat note and appreciated by just 1 paisa to close at 84.70 (provisional) against the U.S. dollar on Friday (December 6, 2024), as the Reserve Bank of India left the repo rate unchanged at 6.5% in its monetary policy decision.
The Reserve Bank of India on Friday (December 6, 2024) kept its key interest rate unchanged, citing inflation risks, but cut the Cash Reserve Ratio that banks are required to park with the central bank, boosting money with lenders to support a slowing economy.
Forex traders said an overall decline in the U.S. dollar and crude oil prices supported the rupee. However, weak domestic markets capped sharp gains.
At the interbank foreign exchange, the rupee opened at 84.66 and touched an intraday high of 84.53 and a low of 84.70 against the greenback.
On Thursday (December 5, 2024), the rupee recovered from its all-time low level and settled for the day with gains of 4 paise at 84.71 against the U.S. dollar.
“We expect the rupee to trade with a slight negative bias as the RBI lowered India’s GDP growth for FY25 to 6.6% from 7.2% in its previous projections,” said Anuj Choudhary, Research Analyst at Mirae Asset Sharekhan.
RBI lowered its growth forecast for the year ending March 2025 to 6.6% from its earlier projection of 7.2%.
RBI Governor Shaktikanta Das, however, said the GDP slowdown bottomed out in the July-September quarter and has seen a pick-up in subsequent months due to festival spending and strong agriculture output.
Mr. Choudhary further noted that the demand for the U.S. dollar may also keep the rupee under pressure.
However, weakness in crude oil prices and fresh foreign fund inflows may support the rupee at lower levels.
“Any intervention by the RBI may also support the rupee. Traders may take cues from non-farm payroll reports from the U.S. The USD-INR spot price is expected to trade in a range of 84.45 to 84.95,” Mr. Choudhary said.
Moreover, the Reserve Bank on Friday (December 6, 2024) announced a raise in the interest rate caps on the diaspora’s foreign currency deposits, in a move aimed at attracting more capital flows amid pressures on the rupee.
Announcing the fifth bi-monthly monetary policy for the current financial year, Mr. Das said it has been decided to increase the interest rate ceilings on Foreign Currency Non-Resident Bank deposits, or FCNR (B) deposits, as per tenors.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.13% at 105.85.
Brent crude, the global oil benchmark, fell by 0.33% to $71.85 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex closed 56.74 points, or 0.07% lower, to 81,709.12 points. The Nifty fell 30.60 points, or 0.12%, to 24,677.80 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday (December 5, 2024), as they purchased shares worth ₹8,539.91 crore, according to exchange data.
Published – December 06, 2024 04:26 pm IST