Indian rupee near record high ahead of RBI decision

Aug 4 (Reuters) – The rupee was near its lowest level on Thursday as traders pulled back ahead of the Reserve Bank of India’s monetary policy decision.

The partially convertible rupee fell 0.4% to 79.4650 to the dollar, after falling to 79.8075 earlier in the day, its lowest level in a week. It hit a record low of 80.065 against the dollar on July 19.

The Rupee’s weekly volatility hit its highest level in nearly five months as the lack of RBI rate hike guidance left traders guessing.

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The monetary policy committee will announce its decision on Friday, with an increase between 35 and 50 basis points. Read more

In the derivatives market, the USD/INR 80 and 79.75 strike call options expiring on Friday saw significant increases in open interest, suggesting traders were hedging against a sharp drop in the Rupee after the political decision of the RBI.

The currency is in free fall following a report late Tuesday that India’s interim trade deficit for July widened to a record $31.02 billion from $10.63 billion a year earlier, as imports once again exceeded exports. Read more

The rupee has finished appreciating and is most likely to trade between 80 and 81 against the dollar in the near term due to inflation fears and US Federal Reserve tightening monetary policy, a trader said. a private bank.

Meanwhile, a Reuters poll of FX strategists showed the unit is likely to trade near an all-time low over the next three months on the back of outflows and concerns over funding the current account deficit. Read more

Indian stocks (.NSEI) also reacted to the rupiah’s woes as they sat out of a broader rally in Asian equities by pulling off a six-day winning streak.

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Reporting by Anushka Trivedi; Editing by Anil D’Silva

Our standards: The Thomson Reuters Trust Principles.

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