The Indian rupee closed stronger against the US dollar on Thursday amid the Reserve Bank of India’s Monetary Policy Committee (MPC) meeting and softening global crude oil prices. The market kept its eyes on the RBI’s interest rate decision on June 5. However, due to the increasing geopolitical tension between America and Iran, there was volatility in the energy market, due to which the rise of the rupee was limited.
Rupee strengthened against dollar
The rupee opened at 95.70 per dollar in the interbank foreign exchange market. During trading it reached a high of 95.59 and a low of 95.87. Finally, the rupee closed at 95.74 per dollar, which is 2 paise stronger than the previous closing price. A day earlier i.e. on Wednesday, the rupee had weakened by 40 paise and closed at 95.76 per dollar.
West Asia crisis becomes a cause for concern
Forex market experts say that the ongoing tension in West Asia is a matter of concern for India, because the country is largely dependent on imports for its energy needs. Due to increasing tensions between America and Iran, investors are turning to safer investment options, which is increasing volatility in global financial markets.
Market’s eyes fixed on RBI’s decision
Now investors are eyeing the decision of the Monetary Policy Committee (MPC) of RBI. The six-member committee headed by RBI Governor Sanjay Malhotra will give its decision on June 5. Experts believe that the West Asia crisis may increase pressure on both inflation and economic growth. In such a situation, RBI can maintain the repo rate at 5.25% for now.
Dollar index and crude oil softened
Meanwhile, the dollar index, which measures the strength of the US dollar against six major currencies, was trading 0.21% lower at 99.31. At the same time, the price of global oil benchmark Brent crude also fell by 2.04% to $ 95.81 per barrel.
How might the rupee move?
According to Anuj Chaudhary, Research Analyst, Mirae Asset Sharekhan, the rupee may remain under pressure due to geopolitical tensions and strengthening in US bond yields. However, if there is any positive progress in the talks between America and Iran, then the rupee may get support.
He said that investors will also keep an eye on America’s employment data and RBI’s monetary policy. According to him, in the near future the dollar-rupee exchange rate may remain in the range of 95.40 to 96.15.
slight rise in stock market
Limited gains were seen in the domestic stock market on Thursday. Sensex rose 13.84 points to close at 74,360.01, while Nifty rose 10.95 points to 23,416.55. However, foreign institutional investors (FIIs) sold shares worth a net Rs 4,447.06 crore on Thursday.
