Focus now shifts to RBI's meeting this week, with its decision due on Friday.
“Amid a liquidity deficit of more than ₹21,000 crore in the banking system, RBI will have lesser room to step in and curb rates and volatility. Despite the deficit, RBI might have used its reserves as forex storage fell by another $5.22 billion to $545.65 billion. The upcoming RBI’s monetary policy, which is due on the 30th September will be important as the announcement on the repo rate hike, cut in CRR, and changes in stance will be watchful," CR Forex Advisors said in a note.
Meanwhile, India's forex reserves declined $5.219 billion to $545.652 billion for the week ended September 16.
“Nonetheless, currency market players want an early dose of injection to calm down the shaky nerves. However, further strength in the US dollar globally could not keep the rupee trading at an exceptionally fine. Overall, we expect the USD-INR pair to remain volatile with downside support at 80.50 and strong bullish momentum could not rule out 82.50 levels on the upside," the forex advisory firm said in a note.
In currency trading, the recent rise in the U.S. dollar has been a concern. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, advanced 0.72% to 113.778. On the domestic equity market front, the 30-share BSE Sensex was trading 800 points lower. Foreign institutional investors were net sellers in the capital market on Friday as they offloaded shares worth ₹2,899.68 crore, as per exchange data.
Anand James - Chief Market Strategist at Geojit Financial Services, said: “We continue to scout for the upside target of 81.8 with downside marker placed at 80.7 for now." (With Agency Inputs)
