The Rupee declined by 28 paise to 66.32 against the US Dollar early Tuesday ahead
of the Reserve Bank of India's bimonthly money policy review later in the day.
The domestic currency had closed 11 paise higher at 66.04 against the greenback in the previous session on dollar selling by banks and exporters. Weak global outlook and likely capital outflows from emerging markets are expected to weigh heavy on the local currency. On Tuesday, most Asian equity markets traded lower on weak Chinese data and an overnight fall in the US markets.
The domestic currency had closed 11 paise higher at 66.04 against the greenback in the previous session on dollar selling by banks and exporters. Weak global outlook and likely capital outflows from emerging markets are expected to weigh heavy on the local currency. On Tuesday, most Asian equity markets traded lower on weak Chinese data and an overnight fall in the US markets.
Domestic
equity markets, too, were expected to open with a negative bias. There were
looming concerns over possible FII outflows.
"We expect RBI to take a gradual route of repo rate moderation (by 25 bp to 7 per cent) and sound a cautious tone. This is because global headwinds can test the resilience of the rupee in the short term,"
Most analysts expect the domestic
currency to remain under pressure and test the 66.50 mark against the US dollar
in the near term, which could pose a challenge to RBI easing.
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Rupee trades lower against US dollar
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