On the global front, the dollar stepped back from a seven-month high against an index of currencies after US consumer prices showed a moderation in underlying inflation, prompting markets to trim bets on a December Federal Reserve rate hike.
On the domestic front, India’s new monetary policy committee was concerned about economic growth, and saw the downturn in retail inflation and slack in the economy as an opportunity to cut the key policy rate, according to the minutes of its first meeting released on Tuesday.
Pound regained some lost ground, helped by speculation that British Parliament will assess the deal to quit EU. This is translated as bullish for the currency, as there is a perception that most of the legislators are not in favour of a hard stance on Brexit, a divergent view than Prime Minister Theresa May. Sterling was also helped by the uptick in inflation. However, rise in inflation is simply due to weak Pound and not improvement in aggregate demand.
The Indian currency ended higher by five paise at 66.67/$. The local unit had hit a high of 66.71 and a low of 66.83 today.
The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 66.71 and for the Euro stood at 73.21. The RBI’s reference rate for the Yen stood at 64.40; reference rate for the Great Britain Pound (GBP) stood at 81.7853.