The Indian rupee ended lower on Tuesday as dollar supplies from foreign funds were offset by demand for the US currency from oil firms and foreign banks, which sensed arbitrage opportunities in the offshore non-deliverable forward market.
The rupee ended at 45.01/02 per dollar, slightly lower than the previous close of 44.97/98, its highest level in 5-1/2 months. The rupee crossed above the important 45.00/dollar mark on Monday.
Traders said the Indian central bank's monetary policy unveiled on Tuesday had a negligible impact on trade. The Reserve Bank of India (RBI) lifted the repurchase rate, at which it lends money to banks, by 25 basis points to 7.25 percent.
It left the key reverse repo rate, at which it drains liquidity from the banking system, steady at 6 percent. "A reverse repo rate hike would have helped the rupee," said a private bank trader. The RBI's rate decisions leave the rate differential between India and the US steady at 125 basis points.
Comments
Comments are closed.