Indian rupee posted strong gains and surged by more than half a percent, reversing its previous session’s slide against the dollar following uncertainty ahead of the US Fed's two-day policy meet that begins today.
Domestic equity markets traded volatile with Nifty ending the session at levels of 6126.3 with a loss of 9.6 points.
Dollar index regained a firmer footing as expectations that the US Fed will scale back its stimulus, further pulled the dollar off.
Reserve Bank of India (RBI) in its third quarter review of monetary policy hiked repo rate by 25 basis points to 8 percent, entirely reversing market expec-tation.
This move actually reflects the RBI's much-anticipated shift towards CPI-based policymaking and now the reverse repo rate under the LAF stands adjusted at 7 percent, and the marginal standing facility (MSF) rate and the Bank Rate at 9 percent.
On an annual basis, UK’s 4Q Gross Domestic Product surged by 2.8 percent against the 1.9 percent.
Japanese yen may weaken further as the US Federal Reserve slowly tightens its dollar-liquidity while expectations grow that the BoJ will increase its own stimulus for its economy to offset a sales-tax increase in just over two months.