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Rupee closes stronger despite headwinds; ends 10 paise higher at 85.80/$
The Indian Rupee regained some ground lost in the previous session, even as the dollar index and oil prices remained on the higher side.
The domestic currency appreciated 10 paise to end at 85.80 against the greenback, after closing at 85.90 on Wednesday, according to Bloomberg. The local unit slipped below the 86 mark during Wednesday's session, weighed down by dollar demand from foreign investors.
The currency was down by about 0.4 per cent this year so far, while regional peers such as the Korean won, Thai baht, and Malaysian ringgit have gained from the dollar weakening, according to Reuters. During the day, Asian currencies were mostly higher.
The rupee has been the worst-performing currency this year, despite a 7.5 per cent GDP growth in the last quarter, taking full-year growth to 6.5 per cent, according to Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP.
Meanwhile, all eyes will now be on the Reserve Bank of India's (RBI 's) six-member monetary policy committee (MPC), which began its meeting on Wednesday and is expected to cut the repo rate by 25 basis points (bps) to 5.75 per cent. The committee is scheduled to announce its policy review on Friday.
The dollar index was marginally higher after data showed hiring growth fell to the slowest pace in two years. Private-sector payrolls increased by 37,000 last month, according to ADP Research, as calls for rate cuts by the Federal Reserve grew. The possibility of a rate cut in September has risen up to 75 per cent, per CME's FedWatch tool. Interest rate futures are pricing in muted odds of Fed cuts in June and July, as per reports.
Additionally, the US Federal Reserve's 'Beige Book' report on the economic conditions noted that "economic activity has declined slightly since the previous report," released on April 23. The dollar index, which measures the greenback against a basket of six major currencies, was up 0.07 per cent at 98.86.
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