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The Indian rupee’s direction on Thursday will be impacted by RBI’s policy decision, per a Reuters report.
The Reserve Bank of India (RBI) has possibly been selling dollars to prevent the rupee from weakening below what is regarded a highly important level, according to traders.
The RBI, at 10.00 a.m. IST, is not expected take any rate action, though the decision is now seen less of a formality in the wake of a jump in food prices.
The key change to watch for would be the RBI’s assessment on a spike in food inflation and any potential revision to the current fiscal inflation projections, IDFC First Bank said in a note.
An unexpected rate hike by the RBI will “provide a boost to the rupee, which will not last long” and push USD/INR premiums higher, the forex trader said.
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