The Indian rupee ended flat against the US dollar on Thursday, February 8th, following the Reserve Bank of India's (RBI) decision to keep key interest rates unchanged. Markets had widely anticipated the move, and the lack of surprises limited significant currency movement.
Forex traders noted a lackluster performance in domestic equities, impacting investor sentiments.
At the interbank foreign exchange, the rupee kicked off at 82.94 against the dollar, maintaining a narrow range throughout the day and settling at 82.96 against the American currency. The central bank's retention of the repo rate at 6.5% contributed to this outcome.
While the rupee touched an intraday high of 82.89 and a low of 83 against the US dollar, Wednesday saw a 9-paise appreciation, closing at 82.96 against the dollar.
The RBI's decision to maintain the status quo in its monetary policy for the sixth consecutive time aligned with street expectations, keeping the Indian rupee in a flat trajectory. The central bank also revised FY24 GDP projections upward to 7.3% from 7% and forecasted FY25 GDP at 7%, while predicting a lower FY25 CPI (consumer price-based inflation) at 4.5%.
Despite these positive economic indicators, the rupee faced pressure as domestic markets declined, and the US dollar staged a recovery. Analysts anticipate a slightly negative bias for the rupee, driven by expectations of a US dollar recovery amid hawkish remarks from the US Fed and geopolitical tensions, including the rejection of a peace proposal by Hamas. Positive global market trends may offer support at lower levels, with traders closely monitoring US weekly unemployment claims data and speeches by Fed officials. The USD-INR spot price is expected to trade in a range of Rs 82.70 to Rs 83.30.