Rupee jumps 39 paise to 94.89 against US dollar ahead of RBI monetary policy decision

The Indian rupee surged 39 paise to 94.89 against the US dollar at the start of trading on Wednesday, driven by a drop in crude oil prices following advances in US-Iranian negotiations and a temporary halt in planned strikes. Market participants are eagerly awaiting the Reserve Bank of India's (RBI) upcoming monetary policy announcement for additional clues.

At the interbank foreign exchange market, the rupee commenced at 94.90, reaching 94.89, marking a gain of 39 paise from the previous close. The previous day, the rupee closed at 95.28 against the American currency. Meanwhile, the dollar index, which measures the greenback's strength against a basket of six currencies, was trading at 99.80, down 0.06 percent.

Brent crude, the global oil benchmark, declined by 1.11 percent to $78.48 per barrel in futures trade. In the domestic stock market, the Sensex rose 375.01 points to 78,803.96 in early trade, while the Nifty increased by 62.7 points to 24,677.60. Forex traders noted that attention has now turned to the Reserve Bank of India's (RBI) policy meeting, which began on Monday with expectations of maintaining the benchmark repo rate.

The Monetary Policy Committee is scheduled to announce its decision on August 5. RBI policymakers, assessing the impact of the West Asia conflict, have maintained the key policy rate at 5.25 percent and adopted a cautious wait-and-watch attitude. The RBI's stance, even if rates remain unchanged, could have a more significant effect on the rupee than the policy decision itself, according to CR Forex Advisors MD Amit Pabari.

Pabari also highlighted optimism surrounding the Hormuz talks, which could enable the rupee to test its support zone of 94.80-95.00. If this holds, the pair may gradually move towards 95.80-96.20 in the coming sessions. However, if the Hormuz deal materializes, the rupee could experience a sharper upward movement of 30 to 40 paise.