Stock markets were subdued and the rupee slipped again to breach 63-mark against dollar on Tuesday ahead of the U.S. Federal Open Market Committee’s (FOMC) decision on its stimulus programme. Further, the outcome of the U.S. Federal meet (on Wednesday) is crucial for the Reserve Bank of India (RBI) when it reviews its monetary policy on September 20.
The rupee closed at 63.37 on Tuesday as compared to its previous close of 62.83 on Monday. It moved in a range of 62.95 to 63.64 intra-day.
“Indian rupee lost ground once again as it depreciated in Tuesday’s session, after surging to its highest level in over a month recently, wherein it tested highs of 62.45 in spot market,” said Sugandha Sachdeva, Assistant Vice-President and Incharge-Metal, Energy & Currency Research, Religare Securities.
The recent appreciation of the rupee was supported by a recovery in domestic equity markets and sliding dollar index. Further impetus for the rally was Larry Summer's exit from the race for Federal Reserve Chairman. He was considered by markets to be in favour of tapering the Fed’s massive bond-buying programme. His withdrawal has put Janet Yellen as the front runner in the race for the job. She, on the other hand, is believed to have a soft stance towards the continuation of stimulus programme. The Indian currency’s movement is likely to be highly volatile in coming days till the outcome of the two-day-long Federal Reserve meeting, and its stance towards slowing down the pace of asset purchase programme. “Markets will also be looking forward to the RBI monetary policy on September 20. Price pattern, however, suggests that the rupee is expected to swing in the range of 61-65.50 in the near-term, due to a high level of uncertainty in the market place,” Ms. Sachdeva added.
However, in the offshore non-deliverable forwards, the one-month contract for the rupee was at around 64 per dollar, and for three-month contract below 65.
The Bombay Stock Exchange (BSE) 30-share Sensitive Index (Sensex) closed at 19804.03 with a gain of 61.56 points or 0.31 per cent. On the National Stock Exchange (NSE), the 50-share Nifty gained 9.65 points or 0.17 per cent to close at 5850.20.