USD/INR Closed at 68.7450 against its opening at 69.27. USD/INR closed down on Tuesday as likely overseas inflows into local debt following expectation of a dovish stance in the upcoming Reserve Bank of India's bi-monthly monetary policy due later this week.
Brent is trading above $69/bbl; PSBs including State Bank of India were buying dollar likely on behalf of oil importers. Also, foreign banks including Standard Chartered Bank, Bank of America are on the buy-side after the RBI's announcement of another FX swap auction later this month. Even dollar remain supported by strong upbeat US manufacturing sector data. However, heavy overseas inflows into local debt tracking expectation of a dovish RBI policy is pulling down spot.
The Reserve Bank of India on Monday said it will conduct a three-year $5 billion dollar-rupee swap auction on Apr 23 following the success of the first round last month. RBI issued forex swaps aggregating $5 billion on Mar 26 to help inject liquidity, in time to mitigate the surge in demand as the fiscal year closed on Mar 31.
The spot pair traded higher on buying by foreign banks tracking a strong greenback and Reserve Bank of India's announcement for conducting another FX swap auction later this month.Adding to that, nationalised banks also bought dollar likely on behalf of oil importers tracking a sharp up-tick in Brent crude oil prices above $69 a barrel.
The Reserve Bank of India's Monetary Policy Committee meeting began today and is scheduled to release its statement after concluding its meeting on Apr 4.The market is expecting the Reserve Bank of India to cut rates by 25 basis points.The greenback strengthened against other major currencies after data showed US manufacturing activity recovered in March, rising faster than expected in March after hitting a two-year low in the month prior.
The dollar index against a basket of six major currencies, traded at 97.29 Tuesday compared to 97.10 at close of Indian market on Monday.
Sensex provisionally ends 212 points higher with 18 components in the green.