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Indian Rupee remains unaltered after the RBI kept interest rates on hold. On Wednesday, INR witnessed a suspect rally in anticipation of a rate cut, erasing early losses and turning positive for the week. On the currency market, the Rupee appreciated by 32 paise settling at 71.36 (New York close based-price) against the US dollar.
During the early Asia trading hours and after the London open, the USD/INR exchange rate was seen quoted within a tight range of 71.70 — 71.59, as currency traders are restrained ahead of the RBI interest rate decision.
Wednesday’s trading session saw the USD/INR exchange rate fluctuate within the range of 71.52 — 71.31. The dollar index, which gauges the greenback’s strength against a basket of major currencies continues to struggle to regain its lust and dropped to an intra-day low of 97.43 but erased some losses before the close and settled at 97.61. The broad-based dollar weakness has benefited Rupee in the short-term.
India’s central bank surprised the Asian markets and kept its benchmark interest rate at 5.14%, despite many Wall Street analysts forecasting the RBI to slash rates by another 25 basis points to 4.90%. The market was expecting the RBI to ease further amid apathetic economic growth, which slowed down to its lowest level in six years.
In other news, the trade war tension continues to disturb the market volatility and threatens the stability of the global financial system. The bilateral collaboration between the world’s two most powerful economies is put in jeopardy after the US House of Representatives approved the Uighur Act of 2019, which condemns China’s treatment of its Muslim minority.
Most Wall Street analysts are very pessimistic about the possibility of an agreement on the phase-one trade deal until the end of the year. The new planned US tariffs scheduled to enter into effect in less than two weeks will further damage the US — China trade relationship.
The domestic benchmark equity index NIFTY 50 followed the lead of the US index and recovered some of its early losses settling at 12043. During early Asia trading hours, NIFTY 50 was seen quoted at 12081. The Indian 10-year government bond yield was seen quoted at 6.57 versus 6.47 previous closing prices.
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