The rupee settled for the day on a flat note higher by just 1 paisa at 84.84 (provisional) against the US dollar on Wednesday, a tad above its all-time low level, amid rising expectations of a shift in the Reserve Bank's monetary policy stance post the appointment of Sanjay Malhotra as the new RBI governor.
Forex traders said the Indian rupee touched a fresh all-time low of 86.87 in intraday trade as change of guard at the Reserve Bank of India raised odds of a rate cut by the Reserve Bank of India (RBI) in its February meeting.
A bounce back in the US dollar from earlier lows also weighed on the rupee. However, positive domestic markets, FII inflows and reports of RBI intervention supported the rupee earlier in the day.
At the interbank foreign exchange, the rupee opened at an all-time low of 84.87 against the greenback. The USD/INR pair traded in a tight range and ended the session at 84.84 (provisional) against the dollar, higher by just 1 paisa from its previous close.
On Tuesday, the rupee settled for the day on a flat note higher by just 1 paisa at 84.85 against the US dollar.
The government on Monday appointed revenue secretary Sanjay Malhotra as the 26th Governor of the Reserve Bank of India.
Malhotra takes guard at a time when the Indian economy is faced with the dual challenge of slowing growth rate and high inflation.
While Shaktikanta Das kept benchmark interest rates unchanged for almost two years in a bid to control inflation, the incoming governor is said to be a team player who believes prices cannot be managed by the Reserve Bank of India (RBI) alone and the task needs government help as well.
"We expect the rupee to trade with a negative bias on strength in the US dollar and a rise in global crude oil prices. However, positive domestic equities and FII inflows may support the rupee at lower levels," said Anuj Choudhary – Research Analyst at Mirae Asset Sharekhan.
Choudhary noted that any further intervention by the RBI may also support the rupee. Investors may remain cautious ahead of US inflation data. Inflation is expected to be higher than the previous month. USD-INR spot price is expected to trade in a range of 84.65 to 85.10.
The dollar index, which gauges the greenback's strength against a basket of six currencies, was trading higher by 0.25 per cent at 106.66.
Brent crude, the global oil benchmark, rose 0.93 per cent to USD 72.86 per barrel in futures trade.
On the domestic equity market front, the 30-share benchmark index Sensex closed higher by 16.09 points or 0.02 per cent at 81,526.14 points. The Nifty was up 31.75 points, or 0.13 per cent, to 24,641.80 points.
Foreign Institutional Investors (FIIs) were net buyers in the capital markets on Tuesday, as they purchased shares worth Rs 1,285.96 crore, according to exchange data.
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