The rupee slipped to 96.45 against the U.S. dollar on Wednesday, a 0.03‑point slide from Tuesday’s close at 96.42, as investors await the RBI’s policy announcement at 10 am.
A Reuters poll of 61 economists shows 35 expect the central bank to lift the repo rate by 25 basis points, while 26 anticipate no change. The remaining 10 are split, with a handful hinting at a 50‑basis‑point move.
Swap markets have priced a 25‑basis‑point hike into their spreads, yet a 50‑basis‑point scenario still lingers on the books, reflecting market uncertainty about the size of the move.
Liquidity management remains a key focus. The RBI has been deploying variable‑rate reverse repo auctions, FX swaps, and open‑market bond sales to drain excess funds. IDFC First Bank analysts note that, despite these tools, core liquidity surplus remains high, requiring careful alignment of the weighted average call rate with the new repo rate.
With the decision slated for 10 am, traders are watching for any guidance on the duration of liquidity‑drain measures. A no‑change outcome could pressure the rupee, while a 50‑basis‑point hike might provide a short‑term lift, though market sentiment suggests the impact would likely be muted.
Investors should monitor the RBI’s statement for clarity on both rate and liquidity strategy, as that will dictate the rupee’s trajectory and influence cross‑currency flows into Indian assets.