Rupee is expected to hold firm

Rupee closed at 45.19 per dollar, the highest level since mid-May, from 45.31 per dollar. In addition to the optimistic growth outlook, the rupee drew strength from the broad weakness of the dollar. Dollar weakened across the board after US FOMC statements disappointed traders hoping for higher US yields in the short to medium term.

Forward premia edged up while the RBI policy review meeting approached. Six-month premium closed at 1.65% from 1.59%. Rupee is expected to hold firm on the back of local growth outlook.

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