The USDINR pair made a flat opening at 75.05 levels and traded in the range of 74.96-75.17 with a sideways bias. The pair finally closed at 74.96 levels. The RBI set the reference rate at 75.1167 levels. The USDINR pair was a tad down tracking gains in domestic and Asian benchmark equity indices which rose to track an overnight rise in US stocks.
However, losses in the pair were capped as the US dollar gained amid fears that a fresh rise in COVID-19 cases in China and Europe may slow down the pace of the global economic recovery. This led investors to reassess their views on the tightening of the ultra-accommodative monetary policy by the US Fed as a slower pace of economic growth may not allow the US central bank to tighten its monetary policy aggressively. Investors worldwide now await the outcome of major central banks' meetings, including the ECB, BoJ, and Bank of Canada, scheduled this week. On an annualized basis, a premium on the one-year, exact period dollar/rupee contract rose to 4.65% as compared to 4.60% recorded in the previous close.
The German government has slashed its economic growth forecast for this year to 2.6% but lifted its estimate for next year to 4.1%. The revised government forecast for GDP growth compares with an April prediction for the economy to grow by 3.5% in 2021 and by 3.6% in 2022. Oil prices edged lower after rising earlier in the day and analysts said prices were set to sustain a rally driven by strong demand in the US.
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