Rupee commences trade at 65.84/$

On domestic macroeconomic cues, India’s current account deficit during the first quarter of this fiscal year narrowed to 1.2% of GDP, thanks to contraction in trade deficit and higher earnings from services exports.

Indian Rupee today opened at 65.84 against the dollar, lower by 17 paise in early trade on Monday. Rupee was helped by positive tone in the equity markets and dovish US Federal Reserve policy statement. Emerging markets have heaved a sigh of relief, as Fed language indicated that it is concerned that recent economic and financial disorder across the globe can impact US economy and also lead to subdued inflationary levels. As a result, Fed will not haste in hiking interest rates. There is a growing possibility of a strong pause before the first rate hike.

On domestic macroeconomic cues, India’s current account deficit during the first quarter of this fiscal year narrowed to 1.2% of GDP, thanks to contraction in trade deficit and higher earnings from services exports. Meanwhile, there is a strong perception that Reserve Bank of India will trim the interest rates by 25‐50bps at the monetary policy review meeting at the end of this month. Dovish US Fed policy statement and moderating Indian inflationary scenario will compel RBI to act on the interest rates.

The currency touched a high and low of 65.89 and 65.05 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 65.92 and for Euro stood at 75.12 on September 18, 2015. While, the RBI’s reference rate for the Yen stood at 55.01, the reference rate for the Great Britain Pound (GBP) stood at 102.7515.