The rupee fell on Monday in a volatile session after an upward revision in US quarterly growth data raised concerns about earlier-than-expected interest rate hikes there, while caution also prevailed ahead of the Reserve Bank of India's policy review.
The RBI is widely expected to keep interest rates on hold on Tuesday, with investors more focused on what tone it will adopt about future moves.
Although the central bank's commitment to fight inflation has sparked a rally in Indian markets, traders also warn an excessively hawkish tone could also raise concerns that any fight to curb prices would come at the expense of economic growth.
"We do not expect any big announcements in the policy review tomorrow," said Vishweshwara M., assistant general manager, treasury, at Karnataka Bank in Mumbai.
"Having said that we expect the dollar-rupee to stabilise at these levels, with the next resistance around 61.60/70."
The partially convertible rupee ended at 61.53/54 per dollar compared with Friday's close of 61.14/15. It fell to 61.62 on Monday, matching the 1-1/2
The falls on Monday erased the rally in the previous session after Standard & Poor's raised its outlook on India's credit rating to "stable" from "negative".
Emerging Asian currencies weakened on Monday after an estimate showed the U.S. economy grew 4.6 percent in its second quarter, faster than the initially estimated 4.2 percent, raising fears of earlier-than-expected rate hikes.
Currencies were also hit by tensions in Hong Kong after clashes between pro-democracy supporters and police in one of the biggest political challenges for Beijing since the Tiananmen Square crackdown 25 years ago.
Dollar demand from oil and other importers to meet month-end import commitments also pressured the rupee, dealers said.
In the offshore non-deliverable forwards, the one-month contract was at 61.95, while the three-month was at 62.58.
© 2024 Rediff.com -