INR has added more gains against the greenback erasing previous week losses as currency traders brace for the RBI interest rate decision. At the interbank market, the value of Rupee appreciated by 21 paise settling up 0.30% at 71.10 against the US dollar. However, the USD/INR exchange rate was seen trading on Tuesday within a trading range of 71.31 and 71.07.
USD/INR – RBI interest rate is expected to be kept on hold at 5.15%
The RBI interest rate decision is scheduled to be released tomorrow and the benchmark interest rate is expected to be kept on hold at 5.15%. The new fiscal measures announced by the Finance Minister Nirmala Sitharaman is going to weigh on the RBI policy stance.
Following 5 consecutive interest rate cuts in 2019, India’s central bank will keep its policy rate accommodative. The dovish stance has the potential to put some pressure again on the back of the INR exchange rate.
Meanwhile, the risk appetite has continued to improve as coronavirus related fears have faded away.
The dollar index, which gauges the greenback’s strength against a basket of major currencies, extended its gains to settle up 0.14% at 97.95.
Elsewhere, foreign institutional investors (FIIS) were net buyers of shares in the local equity market worth Rs 366.21 crore; according to the National Stock Exchange of India data published at the end of Tuesday’s trading session. At the same time, Domestic Institutional Investors (DIIs) were net buyers of equities worth Rs 601.86 crore.
The domestic benchmark equity index NIFTY 50 tracked the movements in the Asian stock market following the news that China will add additional stimulus to stabilize the economy. At the end of Tuesday close, NIFTY 50 index settled up 2.32% at 11,979.65, the biggest daily gains since 20 September. However, during early Asia trading hours on Wednesday, Indian shares were up an additional 0.34% at 12,020.50.
The Indian 10-year government bond yield was seen quoted at 6.50% in morning trade compared with its previous close of 6.51%.
Currently, at the interbank market, one US dollar buys 71.22 Rupees, up 0.17% as of 7:58 AM UTC.
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