Following the continuous fall today the Indian rupee crossed 74 mark for the first time after Reserve Bank of India (RBI) kept the repo rates unchanged. Rupee plunged to a record low 74.16 per dollar. It was down 58 paise from previous close 72.58 per dollar. It opened a little bit lower in the early trade. Sensex closed at 34,376.99, it down by 792.17 points.
The reason of continues fall in Rupee are sell-off in equity markets, strength in the dollar and increase in global crude oil prices which contributed to weakness of the Indian currency. On the domestic front, market participants will be looking on RBI policy statement and anticipations is that the central bank could lift up rates by 25bps.
Increase in global crude oil prices and weakness in the Indian currency rupee could push the RBI officials to raise rates, but highly focus will be on whether central bank raises its inflation anticipations for the latter half of the year.
The central bank in its Monetary Policy Committee (MPC) meeting did not changed the repo rate and kept it at 6.50 percent but changed the stance from Neutral to Calibrated Tightening.
At the same time, market participants will also be keeping an eye forward to taking cues on how the central bank looks to deal with the liquidity issue. Today, USD-INR pair is likely to quote in the range of 73.60 and 74.20.