Indian rupee became stronger on Wednesday gaining as much as 20 paise against the US dollar ahead of RBI monetary policy scheduled for later today. The rupee added 20 paise at 64.04 apiece US dollar at the interbank foreign exchange market on Wednesday. The domestic currency advanced by 13 paise to open at 64.11 vs the US dollar in early trades. The domestic currency was on a declining trend against the US dollar for the last four days, up until Tuesday, 6 February 2018. The Reserve Bank of India fixed the reference rate of the rupee at 64.2723 against the US dollar on Tuesday. Earlier yesterday, the rupee fell 17 paise to close at a seven-week low of 64.24 per US dollar.
Stock markets are keeping a close eye on a possible revision in the inflation estimates of the Reserve Bank of India today as the central bank is all set to announce its sixth and the final bi-monthly monetary policy for the financial year 2017-2018. This will likely guide the direction of interest rates, even if there is no rate action immediately. Observers are also keenly looking out for any steps the central bank might take to boost market demand for central government securities, which are seeing reduced buying by public sector banks. In its fifth bi-monthly monetary policy in December, the central bank had revised its inflation estimates to 4.3-4.7% in the third and fourth quarter of this year, including the HRA effect of up to 35 basis points, with risks evenly balanced.
Meanwhile today, a market-wide recovery was seen in the Indian stock markets with Sensex rallying 470 points and Nifty topping 10,614 after a three-day massive plunge while SBI shares gained 2% ahead of RBI’s repo rate decision due later today. Indian equities have witnessed a steep correction in the last three days due to global sell-off and worries over LTCG being taxed. BSE Sensex jumped as much as 470.39 points to hit the day’s high of 34,666.33 and NSE Nifty added 115.75 points to mark the day’s high at 10,614. Shares of India’s largest lender State Bank of India shot up 2.21% to a day’s high of Rs 297.95 and were among the top five gainers out of the Sensex components.
