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The Rupee could continue the race ahead (Wednesday, May 22, 2019)

The Rupee is expected to open higher against the dollar ahead of the nation’s election results and the U.S. Federal Reserve’s latest meeting minutes. Results of India’s federal elections will begin trickling in before local currency markets open for trading tomorrow. A clear direction may very well emerge prior to the market open, in which case, the rupee will witness a major move, depending on what the early trends indicate.

Meanwhile, Asian currencies were mostly lower ahead of the minutes of the Federal Reserve’s May meeting. After the monetary policy review, the U.S. central bank left interest rates unchanged and maintained its patience stance in the face of muted inflation pressures. However, Fed Chair Jerome Powell in his post policy conference remarked that the current low inflation was likely due to transitory factors, pushing back against expectations on an interest rate cut in the current year.

The BJP and the key opposition Congress party had promised doles and cash transfers to the poor and farmers if voted to power. The government that takes over will present by July-end the full budget for the fiscal year started Apr. 1.Traders expect the RBI” open market purchase of notes in this financial year to be at par with the last fiscal. The central bank has bought bonds worth 250 billion rupees so far in this financial year after buying notes worth 2.99 trillion rupees in the previous year. The board of the RBI will create a specialised supervisory and regulatory cadre within the central bank to support the financial sector, according to a press release on the RBI’s board meeting in Chennai yesterday.