USD/INR closed at 73.7650 against its open at 73.64. Dollar dropped after opening at record high Friday on selling by foreign banks and exporters despite concerns over surging global crude oil prices.However, the fall in spot was limited due to overseas funds outflow from local stocks amid arbitrage opportunity between the spot pair and one-month non-deliverable forward market.
Exporters selling along with foreign banks is keeping rupee strong today. However, at dips dollar bulls (with overseas offices) are buying to simultaneously sell in the NDF market.
The Monetary Policy Committee (MPC) led by Reserve Bank of India Governor Urjit Patel is scheduled to release statement of bi-monthly Monetary Policy review at 2:30PM on Oct 5.
"A weaker rupee has exacerbated the landed cost of various imports, including domestic retail fuel prices, raising concerns regarding the trajectory of inflation," said Aditi Nayar, Principal Economist at ICRA Limited.
Local stocks opened lower on fears upbeat labour market data from the US, which led to sharp rise in the US Treasury yields, may prompt the Federal Reserve to hike rates aggressively.
Sensex plunges 792 points, Nifty dips 2.7% as RBI keeps repo rate unchanged at 6.50%, rupee hits 74 for the first time.