USDINR opened 16 pips firm @ 70.77/78 against Monday finished at 70.93/94 levels. Rupee recover from month lows on Inflation data showed in December grew at a slower pace as compared to the previous month. Inflation grew at 2.19% compared to 2.33% in the previous month raising hopes of rate cut in the upcoming RBI meeting. Slower than expected economic growth and benign inflation scenario could push the RBI to change its stance and cut rates to support growth.
INTRADAY RANGE - 70.20 ( 70.58 - 70.95 ) 71.15
On Monday USDINR plunged by 51 pips to close at nearly one-month low of 70.93 amid weak industrial output growth data, fall in domestic equity markets and sustained foreign fund outflows. A weak US dollar against major global currencies and fall in crude oil prices, however, capped losses of the domestic currency. The domestic currency, however, recovered some lost ground and finally settled for the day at 70.93 per dollar, down 51 pips over its previous closing. This is the lowest closing level since December 17 when the rupee closed at 71.56 per dollar.
The dollar has strengthened over the last two sessions even though markets are increasingly confident the U.S. Federal Reserve will not raise interest rates this year. But a shock contraction in Chinese exports has fanned worries a sharp slowdown in the world's second-largest economy is imminent, sparking selling of riskier assets. Worries of slowing domestic and global growth as well as tame U.S. inflation are expected to discourage Fed policymakers from raising borrowing costs in the world's largest economy. Interest rate futures markets are pricing in no further rate hikes in 2019.
Comments