The Indian rupee ended steady on Tuesday with the market mulling over policy signals after the central bank left rates unchanged, though sentiment may get a fillip if the US Federal Reserve cuts rates on Wednesday.
The partially convertible rupee traded in a narrow band, to end at 39.38/39 per dollar, unchanged from the previous close. It hit a decade high of 39.16 in November.
"We should see some good flows if the Fed cuts rates, though the RBI is likely to mop them up," said a senior dealer with a private bank, referring to the Reserve Bank of India. India's central bank left all its key rates steady on Tuesday, saying inflation risks persisted, but analysts said it was leaving the door open for a rate cut if market turmoil threatened growth and financial stability.
A slight majority of analysts expect the RBI to cut interest rates in coming months, a Reuters poll showed on Tuesday. Six of 11 analysts polled after the policy review forecast the central bank would cut its 7.75 percent repo rate by at least a quarter percentage point by June. One analyst expected a 50 basis point cut in April, while the others forecast no change.
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