In the interbank foreign exchange market, the domestic unit opened lower at 81.95 per dollar, down 5 paise from the previous close. The local unit also hit a high of 81.88 against the dollar in initial trade.
Updated – Thu, 4/6/23 at 10:35am
Mumbai: The rupee weakened 5 paise to 81.95 against the dollar in early trade on Thursday, as investors tended to stay on the sidelines ahead of the Reserve Bank of India’s policy decision.
In the interbank foreign exchange market, the domestic unit opened lower at 81.95 per dollar, down 5 paise from the previous close. The local unit also hit a high of 81.88 against the dollar in initial trade.
The rupee gained 42 paise to close at 81.90 per dollar on Wednesday.
CR Forex Advisors MD Amit Pabari said: “Today, the RBI will release its monetary policy outcome, which will focus on the Indian rupee as the market has priced in a 25 basis point rate hike by the RBI.”
The Reserve Bank of India’s rate-setting panel began a three-day meeting on Monday, with expectations the central bank could raise its benchmark interest rate by 25 basis points, which could be the last in the current monetary tightening cycle starting in May 2022.
Pabari further noted that the Monetary Policy Committee headed by Reserve Bank Governor Shaktikanta Das will maintain the option of raising interest rates by continuing its “withdrawal from accommodative” stance and sticking to its tightening policy.
“However, if the RBI governor hints at a pause in further rate hikes, or if he surprises with a lower rate hike in his speech, it will hurt local units,” he said.
Meanwhile, the U.S. dollar index , which measures the greenback’s strength against a basket of six currencies, rose 0.16% to 102.01.
Brent crude futures, the global oil benchmark, fell 0.92% to $84.21 a barrel.
On the domestic stock market, the 30-share BSE Sensex fell 89.46 points or 0.15 percent to 59,599.85. The broader NSE Nifty fell 22.45 points or 0.13% to 17,534.60.
Foreign institutional investors (FII) were net buyers in the capital market on Wednesday, buying shares worth Rs 806.82 crore, according to exchange data.
