Snapping its four-day losing streak, rupee advanced 7 paise to 64.09 per against dollar in early trades today. The local currency had closed at a fresh six-week low of 64.16 on Monday amid persistent demand for the greenback from banks and importers.
All eyes were on the US Federal Reserve's two-day meet beginning later in the day. Cues on when the US apex bank will start raising interest rates will be a key factor that may drive dollar movement in the near future.
"While our US economists expect a September rate hike, they think that the FOMC statement would emphasize data dependence and eschew any overt signals about the timing of liftoff," said BofA-ML in a research note. JPMorgan too expects the US Fed to start hiking rates in September.
In an interview to ET, Adrian Mowat of JPMorgan said, "Our base case is the US Federal Reserve will exit zero interest rate policy in September meeting. We expect fair amount of guidance post the July meeting with regard to exiting zero interest rate policy in the September."
Dollar index, which tracks the movement of dollar against a trade-weighted basket of six major world currencies, stood almost flat at 96.52.
"We do not expect the RBI to offer anything more than a token resistance at Rs 64/dollar given that the rupee is seasonally weak in August. With our equity strategists expecting BSE Sensex stocks to post zero per cent profit growth, it is natural that portfolio flows will stall," the BofA-ML note said.
The brokerage though expects the Governor Raghuram Rajan to sell $15 billion of dollars to defend Rs 65 per dollar levels.Bofa-ML's FX strategist, Adarsh Sinha, sees rupee at 64 per dollar in September.
Source:economictimes.indiatimes.com
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