India rupee firms ahead of RBI policy, oil prices take backseat

(Updates for market open) By Nimesh Vora MUMBAI, Oct 7 (Reuters) — The rupee edged higher on Wednesday ahead of the Reserve Bank of India's policy decision, with the central bank's rate signal taking precedence over concerns about high oil prices. 42. A large US-based foreign bank was seen selling dollars, while traders continued to see the possibility of RBI intervention through state-run banks. m.

policy decision is firmly in focus for the rupee. A 25-basis-point rate hike is already largely priced into markets, shifting attention to how the central bank frames the move and whether it signals further tightening. HSBC analysts said in a note that the policy debate was “not about rate hikes” but rather about how the RBI can reinforce its credibility with inflation expected to rise and with an external backdrop that remains challenging. 50 in Asia trading.

Higher oil prices, rising global bond yields and a firmer dollar are together weighing on emerging-market inflows, according to HSBC. That's been reflected in foreign equity outflows from India, which have gathered pace in recent sessions. For the rupee, the focus is more onwhat the RBI signals about its monetary policy path going forward and less on the size of the widely expected hike, analysts said. HSBC said a credible hike would be one that conveys "more might come if needed", arguing that policy credibility could matter for the rupee given the uncertain external environment and the RBI’s large short-forward position.

com)