Rupee opens 14 paise lower at 69.40 ahead of RBI policy outcome

The rupee on Thursday opened 14 paise lower at 69.40 against the US dollar amid falling crude oil prices and cautious Asian equities. The domestic unit on Tuesday settled unchanged at 69.26 in lacklustre trade as participants preferred to sit on the fence ahead of the RBI monetary policy outcome, slated to be released today. 

Markets were shut on Wednesday on account on Eid-ul-Fitr. 

"Market is already pricing in the 25 bps (basis points) cut in interest rate amid slower economic growth while inflation remains below target level of 4 per cent," V K Sharma, Head PCG & Capital Markets Strategy, HDFC Securities, said.

The six-member monetary policy committee led by Governor Shaktikanta Das will reduce the repurchase rate by 25 basis points to 5.75 per cent on Thursday, say 31 of 43 economists surveyed by Bloomberg, while three are penciling in a 50 basis points cut, said a Bloomberg report. "The central bank may also switch its stance to accommodative from neutral, given that expectations are growing for the Federal Reserve to slash rates this year," the report added. 

Foreign funds pulled out Rs 416.08 crore in the capital markets on a net basis Tuesday, provisional data showed.

"Today, USD/INR pair is expected to quote in the range of 69.20 and 69.90," says Gaurang Somaiya, Research Analyst (Currency) at Motilal Oswal Financial Services (MOFSL). 

On the global front, Asian shares got off to a hesitant start on Thursday as investors feared a looming US trade war with Mexico would further depress global growth. MSCI’s broadest index of Asia-Pacific shares outside Japan dipped 0.01% in sparse early trade. Japan’s Nikkei dithered either side of flat, while E-Mini futures for the S&P 500 eased 0.1 per cent, said a Reuters report. 

In currency markets, the dollar fared better against a basket of currencies to trade at 97.304, having bounced from a seven-week low overnight.

In commodities, oil prices steadied on Thursday after falling to near 5-month lows in the previous session, but sentiment remained weak as markets are under pressure from rising US supply and a stalling economy. Despite Thursday’s gains, oil markets have moved into bear territory as defined by a 20 per cent fall from recent peaks reached in late April.

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel