The rupee dropped to 54.76 against the dollar after the Finance Ministry in its mid-year economic review cut India’s official growth forecast to between 5.7 and 5.9 per cent for this fiscal.
The Ministry, however, maintained that it was on track to meet the fiscal deficit target of 5.3 per cent.
The Indian currency opened marginally higher at 54.43 against the dollar on a stronger euro and Asian markets. It had closed at 54.48 on Friday.
Further, demand for the American currency from importers and banks continued to cast its shadow on the rupee sentiment.
In addition, the investors will watch out for the central bank’s Mid-Quarter Review of Monetary Policy on Tuesday. A rate cut by the RBI will positively impact the rupee as it will stimulate the investment activity.
Nonetheless, the markets are not expecting any rate cut in the repo rate by the Reserve Bank of India as inflation still remains above the central bank’s comfort zone of 4 per cent.
WPI inflation was lower for the second consecutive month at 7.2 per cent, while core inflation was at a three-year low of 4.5 per cent.
