Monetary Policy Review 2021: Here’s How The RBI Policy Will Impact Rupee

Monetary Policy Review: Experts consider that the rupee could stay robust after current bulletins

Reserve Bank of India (RBI) Governor Shaktikanta Das introduced on February 5, 2021, that the Monetary Policy Committee (MPC) will preserve key coverage charges on the current ranges, which result in the repo and reverse repo charges unchanged. The central financial institution saved the repo charge unchanged at 4 per cent and the reverse repo charge regular at 3.35 per cent. The RBI Governor additionally assured that the central financial institution would constantly assist the financial system’s restoration from COVID-19 by guaranteeing ample liquidity within the system. The Monetary Policy Committee additionally projected the true gross home product (GDP) development to be 10.5 per cent in 2021-22 – within the vary of 26.2 to eight.3 per cent within the first half, and 6 per cent within the third quarter. (Also Read: RBI Monetary Policy Highlights: Repo Rate Unchanged, GDP Growth Projected At 10.5% )

Will the Monetary Policy Committee coverage affect the rupee?

“RBI remains a major buyer of $ in both spot and derivatives market and that is not allowing the Rupee to appreciate inspite of record foreign capital inflows and speculative long positions in the Rupee. A constructive Union Budget, balanced monetary policy and benign global environment may mean that Rupee may remain strong. Over the medium term it may test 72.50 levels,” said Anindya Banerjee, DVP, Currency Derivatives and Interest Rate Derivatives at Kotak Securities.


“After the funds, it was apparent that RBI would not spoil the celebration. The MPC stance was extra over on the traces with our expectations of protecting the repo charge unchanged with accommodative stance. The optimistic take away for forex market was the expansion projection, rupee surged after the true GDP development was projected at 10.5 per cent for FY22,” stated Mr. Rahul Gupta, Head of Research- Currency, Emkay Global Financial Services.

”The USDINR spot’s outlook relies on threat sentiments, which can proceed to select up as nations are lifting journey restrictions. With hopes of liquidity dependable world financial stimulus we anticipate the downward pattern to proceed in USDINR spot. The 72.75 zone is appearing as a sticky assist a break of which can push costs in the direction of 72.50, whereas 73.50 will act as a resistance,” he added.

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