The rupee weakened by another 12 paise to end at 73.93 against the US dollar on Thursday as investors remained cautious ahead of the RBI policy meet outcome.

Analysts said investor focus is on the Reserve Bank of India’s Monetary Policy Committee’s three-day interest rate-setting meeting that started on Wednesday, with the decision due on Friday.

At the interbank forex market, the domestic unit witnessed a highly volatile trading session. It opened at 73.81 and saw an intra-day high of 73.68 and a low of 73.95.

It finally closed at 73.93 a dollar, registering a decline of 12 paise. This is the second straight session of fall for the rupee, during which it has lost 25 paise.

“Indian rupee depreciated despite weakness in dollar and rise in risk appetite in the global markets as investors remained cautious ahead of the RBI monetary policy meeting outcome,” said Saif Mukadam, Research Analyst, Sharekhan by BNP Paribas.

Mukadam further added that “market sentiments improved on promising reports on the efficacy of COVID-19 vaccine and hopes for more fiscal stimulus from the US government. Additionally, the UK granted emergency use authorization for COVID-19 vaccine developed by Pfizer Inc and BioNTech.”

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, fell 0.12 per cent to 91.00.

“The Indian rupee depreciated for the 2nd consecutive session against the US dollar weighed down by continuous dollar purchases likely from the central bank probably to mop up portfolio inflows,” said Sriram Iyer, Senior Research Analyst at Reliance Securities.

Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services, said, “Market participants remained cautious ahead of the important RBI policy statement that will be released tomorrow. The expectation is that the central bank could keep rates on hold, but the focus will be primarily on the commentary of the governor.”

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