The rupee was trading marginally up by 1 paise at 61.78 against the dollar at 4.15 p.m. local time.
The rupee gained 11 paise to 61.68 per dollar in the opening trade against the previous close of 61.79 owing to recovery in the domestic equity market.
The RBI had on Monday eased the interest rate on borrowings under the marginal standing facility (MSF) by 50 basis points to 9 per cent. In July, RBI had raised the MSF rate by 200 basis points, making borrowing costlier for banks.
“The move is definitely a positive one. We should see the rupee appreciating to 60.50 levels by the end of this week,” said Hariprasad M.P., Head-Treasury, Centrum Direct Ltd.
Further, with the continued US shutdown since last week, investors stayed away from major currency markets. Agency reports said the dollar traded near an eight-month low against a basket of currencies.
Dollar outflows
Moreover, the US shutdown is likely to further delay the US Fed’s tapering plan of its $85-billion monthly monetary stimulus. This is expected to restrict the dollar outflows from emerging markets such as India.
