The policy has embarked optimism about growth prospects. Rate cuts are likely to boost the economy. Now the onerous task is whether such a investor friendly policy and measures boost the sluggish FII inflows and boost investor confidence.
Rupee is likely to hover in a narrow groove amid fresh optimism.
Rupee's ascent may be capped by RBI intervention. Forward premia may be on a softer bias amid easy liquidity and a stable Rupee. The dollar may extend its gains on increased demand to buy U.S. stocks on expectation that the economy will benefit from nine Federal Reserve rate cuts this year. The dollar may also gain, as the Euro will likely come under intense pressure this week due to market consternation that the European Central Bank is unlikely cut rates at their monetary policy meeting this Thursday. Actually there's been nothing in the comments of ECB officials regarding interest rates, and the ECB is in no hurry to slash rates, which is really disappointing the markets.