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Tuesday, March 5, 2024

Indian Rupee Reaches Record Low Against UAE Dirham

In early trade on Tuesday, the Indian rupee experienced a 3-paise decline, reaching an all-time low of 22.727 against the UAE dirham (83.41 against the US dollar). This downward trend was attributed to increased demand for the American currency from importers.

Awaiting RBI’s Cues: Forex Traders Eye Monetary Policy Outcome

Reserve Bank of India’s Review Meeting and Decision

Investors are awaiting signals from the Reserve Bank of India (RBI) as the Monetary Policy Committee begins its bi-monthly review meeting on Wednesday, with the decision scheduled for announcement on Friday. This comes after the rupee fell to its lifetime low of 83.42 against the US dollar on November 10.

Market Dynamics and Speculations: US Treasury Yield and Dollar Index: Indian Rupee

Factors Influencing the Rupee’s Movement

The 10-year US Treasury yield saw a rise of 6 basis points in New York to 4.28 per cent, with the dollar index maintaining stability at 103.6. Analysts suggest that recent movements could represent a partial reversal of sharp declines seen in the past three weeks, driven by speculation on potential interest rate cuts by the US Federal Reserve in 2024.

Caution Prevails: Expectations of RBI Intervention and Market Sentiment

Potential for Narrow Trading Range

While the triggers for the upward movement remain unclear, traders are exercising caution, anticipating another session with a narrow range. Expectations of RBI intervention to defend the rupee contribute to this cautious approach.

Regional Impact and Anticipated Volatility: Asian Currencies and Market Outlook

Currencies in Asia and Factors Influencing Rupee’s Volatility

In the broader Asian context, most currencies, including the Korean won, exhibited a decline. The rupee is expected to see volatility this week, influenced by upcoming U.S. economic data and the RBI’s monetary policy decision. Investors are particularly attentive to a crucial U.S. labor market report on Friday, which could offer insights into market expectations regarding the Fed’s policy rate trajectory.

RBI’s Expected Course: Monetary Policy Decision on Friday: Indian Rupee

Widely Anticipated Steady Rates

The RBI is widely expected to maintain steady rates in its monetary policy decision on Friday, contributing to the overall market sentiment and the trajectory of the Indian rupee.

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