The rupee edged lower by 12 paise against the US dollar on Thursday, December 3, settling at 73.93 (provisional) as investors remained cautious ahead of the Reserve Bank of India’s (RBI) policy meet outcome. At the interbank foreign exchange market, the local unit registered a highly volatile trading session. The rupee opened at 73.81 and witnessed an intra-day high of 73.68. It registered a low of 73.95. In an early trade session, the rupee slipped by eight paise to 73.89 against the American currency. It settled at 73.93 a dollar, for the day, with a decline of 12 paise. On Wednesday, the local unit slumped by 13 paise against the dollar and closed at 73.81.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell by 0.12 per cent to 91.00. According to analysts, the investor focus is on the Reserve Bank of India’s Monetary Policy Committee’s three-day interest rate-setting meeting that started on Wednesday, December 2, with the decision due on Friday. According to provisional exchange data, the foreign institutional investors were net buyers in the capital market as they purchased shares worth ₹ 357.35 crore on a net basis on December 2.
“The rupee depreciated despite weakness in dollar and rise in risk appetite in the global markets as investors remained cautious ahead of the RBI monetary policy meeting outcome,” said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.
He added that market sentiments improved on promising reports on efficacy of COVID-19 vaccine and on hopes for more fiscal stimulus from the US government. Additionally, the UK granted emergency use authorization for COVID-19 vaccine developed by Pfizer Inc and BioNTech.