The Indian rupee displayed a steady opening against the US dollar, maintaining a level stance in anticipation of the crucial Federal Reserve policy outcome scheduled for later on December 13.
As of 9:10 am, the domestic currency was holding at 83.39 compared to the previous day’s closing rate of 83.29. The rupee is poised to adhere to a fixed range, with the Reserve Bank of India (RBI) actively engaging in the buying and selling of dollars to uphold stability, as reported by news agency Reuters.
The RBI is strategically acquiring dollars in response to substantial foreign inflows while simultaneously executing sales to curb the rupee from reaching historic lows. Despite noteworthy foreign investments, including $3.7 billion in equity and $800 million in debt, the rupee has maintained a relatively narrow 15-paise band.
With market participants eagerly anticipating the decision from the US Federal Reserve, prevailing sentiment hints at an expectation of stability in interest rates ranging between 5.25% and 5.50%. Despite the Federal Reserve’s ongoing efforts to manage inflation, persistently above the 2% threshold, an immediate rate cut appears premature. The market has factored in this anticipation, but attention remains focused on the Federal Open Market Committee’s (FOMC) growth projections and the Dot Plot, summarizing the Fed’s outlook for the federal funds rate.
The dynamics of foreign exchange markets, influenced by global economic conditions and central bank decisions, underscore the interconnectedness of currencies and the impact on domestic economies. As the rupee navigates these external factors, market observers closely monitor central bank actions and international economic indicators for potential implications on exchange rates and overall economic stability.
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