Rupee ends flat after RBI policy; focus turns to Fed

The Indian Rupee finished mostly flat yet The Reserve Bank of India (RBI) kept its key interest rate unchanged As was widely expected, while focus shifted to next week’s US Federal Reserve interest rate outcome.

the rupee It closed at 82.57 per dollar, compared to 82.5475 in the previous session. The rupee moved in a narrow range from 82.54-82.6125 during the day.

Gaurang Somaiya, a forex and bullion analyst, said the RBI’s move was more or less discounted by the market, Motilal Oswal Financial Services.

Also read: Sensex and Nifty slipped as the RBI points to a tough policy ahead

However, India’s central bank on Thursday signaled that monetary conditions will remain tight for some time as it looks to further curb inflationary pressures. After the RBI result, India’s overnight swaps (OIS) markets paid off interest rate cut bets till 2024.

Murthy Nagarajan, head of fixed income at Tata Mutual Fund, said the rupee is expected to be stable due to a lower current account deficit and continued foreign money inflows in the current financial year.

Meanwhile, the dollar index hovered near three-month highs after a surprise rate hike from the Bank of Canada signaled that other central banks, including the Federal Reserve, may maintain a hawkish stance when policymakers meet next week.

Also read: Indian bond yields rise after the Reserve Bank of India keeps interest rates, inflation above target says

US Treasury yields rose after bets rose for a Fed rate hike at the June 13-14 meeting.

In the near term, it looks like the dollar can hold on to most of its recent gains at the Federal Reserve meeting next Wednesday. ING analysts said in a note that the release of US inflation data for May next Tuesday will also be a big market mover.