India News | Rupee Rebounds 19 Paise to 82.66 Against Dollar as RBI Takes out Excess Liquidity
Get latest articles and stories on India at LatestLY. The rupee gained 19 paise to close at 82.66 against the US dollar on Thursday after the Reserve Bank announced measures to take out excess liquidity from the banking system and kept its key interest rates unchanged.
New Delhi, Aug 10 (PTI) The rupee gained 19 paise to close at 82.66 against the US dollar on Thursday after the Reserve Bank announced measures to take out excess liquidity from the banking system and kept its key interest rates unchanged.
Forex traders said rupee appreciated tracking a weak tone in the US dollar. However, weak domestic markets and a surge in crude oil prices capped sharp gains.
At the interbank foreign exchange market, the local unit opened at 82.81 against the US dollar and moved in a range of 82.66 to 82.86 in the day trade.
The rupee finally settled 19 paise higher at 82.66 against the previous close of 82.85 on Wednesday.
The Reserve Bank of India (RBI) on Thursday left its key interest rates unchanged for a third straight meeting but signalled tighter policy if food prices drive inflation higher.
The hawkish stance was also reinforced by the unexpected announcement of reducing the cash in the banking system by raising the incremental cash reserve ratio (ICRR) to 10 per cent on the incremental NDTL (net demand and time liabilities) over the last 3 months.
This will help in absorbing a large part of the excess liquidity created through the return of the Rs 2,000 notes and the large dividend to the government from RBI.
The move is expected to suck out about Rs 1 lakh crore from the banking system, he said, adding that this liquidity tightening measure will not impact credit needs of productive sectors.
"We expect rupee to trade with a negative bias on risk aversion in global markets and rising global crude oil prices. However, a weak US dollar may support rupee at lower levels.
"Traders may take cues from US inflation data. Headline inflation is expected to rise to 3.3 pc from 3 pc while core inflation is expected unchanged at 4.8 pc on an annual basis. We expect the USDINR spot to trade in the range of 82.40 to 83.30 in the near-term," said Anuj Choudhary - Research Analyst at Sharekhan by BNP Paribas.
After RBI kept repo rates constant, the rupee remained in a small range but it gained towards 82.70 as RBI raised the incremental CRR by 10 per cent, said Anil Kumar Bhansali, Head of Treasury and Executive Director Finrex Treasury Advisors LLP.
As in-flows resumed rupee rose to close at 82.66, Bhansali said.
"Rupee is expected to remain in a range of 82.50 to 82.80 on Friday as in-flows resume and FPIs sell dollar. GDP of UK, Trade Balance, Euro CPI, India FX reserves, US PPI and Michigan sentiments are the important data releases scheduled for Friday," Bhansali said
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.30 per cent to 102.17.
Brent crude futures, the global oil benchmark, declined 0.11 per cent to USD 87.45 per barrel.
On the domestic equity market front, the 30-share BSE Sensex closed 307.63 points or 0.47 per cent lower at 65,688.18. The broader NSE Nifty fell 89.45 points or 0.46 per cent to 19,543.10.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Thursday as they purchased shares worth Rs 331.22 crore, according to exchange data.
(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)