USD/INR closed at 68.9675 against its opening at 68.54. USD/INR ends up on expectation demand for dollar may shoot up after local news wire reported that government prefers using FX swaps to infuse liquidity. Banks were buying dollar on talks the government wants more FX swaps rather than OMOs, which increased the dollar demand in the spot market.
The greenback remained subdued against it major pairs ahead of the Federal Open Market Committee's monetary policy outcome due later this week, where investors expect the Fed statement to be dovish with policymakers reiterating its patient stance towards any rate action.
The dollar index, the movement of the greenback against a basket of six major currencies, traded at 96.41 Tuesday compared to 96.38 at close of Indian market on Monday. Federal Open Market Committee's two day monetary policy meet is scheduled to commence later today with its outcome due on Wednesday.
"We expect no change in the target range for the federal funds rate in March. We think the committee will emphasize that it will patiently assess incoming data before committing to further interest rate adjustments. Instead, we believe that the focus of this FOMC meeting will be on the Fed's balance sheet plans. We expect the committee to announce that it will end the securities runoff in June and begin to reinvest maturing principal from Treasuries and MBS back into Treasuries beginning in July.
Adding to that, crude oil prices hovered just below 2019 highs, supported by ongoing supply cuts led by producer club OPEC and the US sanctions against Iran and Venezuela, while concerns over slowing global economic growth kept a lid to further gains.
Sensex provisionally ends 296 points higher with 24 components in the green.