Rupee Opens Marginally Lower Against US Dollar Ahead Of RBI Board Meet – MasterMind Update

The Indian rupee was trading marginally weaker against US dollar as traders avoided taking long positions ahead of Reserve Bank of India’s key board meeting due later on Monday.

At 9.15am, the rupee was trading at 72 a dollar, down 0.11% from its Friday’s close of 71.93. The currency opened at 71.93 a dollar.

The traders will await a key central bank board meeting later on Monday to see whether the government and RBI reach a truce over key issues like easing rules for weak banks, providing liquidity to non-bank finance companies and framing a new capital framework for the RBI.

On Friday, Bloomberg News reported that India’s government had proposed changing rules that will enable closer supervision of its central bank. The rupee dropped in offshore markets after the news broke, down from 71.92 on Friday.

The home currency rose 0.8 percent last week amid a drop a drop in crude oil prices. According to RBC Capital, if central bank independence comes under attack, the risks are to the downside for the rupee.

Meanwhile, bonds are likely to be helped by the hopes that liquidity conditions will be eased. Finance Minister Arun Jaitley said on Saturday that economic growth should not suffer due to lack of liquidity in the banking system.

The benchmark 10-year bond yield rose six basis points to 7.82 percent on Friday; up five basis points on week after falling in each of five previous weeks.

Sensex, Nifty Open Higher

Indian equity benchmarks extended gains for the third day and are poised for their longest winning streak in over a month.

The S&P BSE Sensex Index rose as much as 0.56 percent to 35,655.78 and the NSE Nifty 50 Index rose as much as 0.46 percent to 10.731.45.

The market breadth was tilted in favour of buyers. All the sectoral gauges compiled by National Stock Exchange advanced, led by the NSE Nifty Pharma Index’s 1.2 percent gain.