Key facts
- The Indian rupee declined for the second consecutive day.
- The decline occurred ahead of the Reserve Bank of India's monetary policy review.
- Traders anticipate measures from the RBI to support the currency.
- The rupee closed at 95.78 on Thursday.
- The RBI intervened to prevent further depreciation.
- Dollar demand from oil companies persisted.
- Most economists expect the RBI to hold rates today, but an August hike is considered likely.
The Indian rupee experienced a decline for the second consecutive day, occurring just before the Reserve Bank of India's scheduled monetary policy review. Market participants are anticipating that the central bank will implement measures aimed at supporting the rupee. The currency had recently seen a recovery, partly due to intervention by the RBI and expectations of increased capital inflows. However, this recovery is now facing renewed pressure, with the potential for significant impact if the upcoming policy decision on Friday does not provide adequate support. On Thursday, the Indian rupee and benchmark bond yields traded narrowly ahead of Friday's policy rate decision and potential currency support measures. The rupee closed at 95.78, with the RBI intervening to prevent further depreciation. Markets awaited key announcements, while dollar demand from oil companies persisted. Most economists expect the RBI to hold its key interest rate today, but an August rate hike is considered a near certainty due to rising inflation risks stemming from elevated oil prices and the weakening rupee.