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Indian rupee snapped a two-session of sell-off on Monday, supported by good dollar selling by corporates, including exporters, while gains in the domestic share market also added further support. The Reserve Bank of

India is likely to leave its key interest rate unchanged at its meeting later today and won’t ease policy until early next year on fears that food inflation will spike if monsoon rains are below average, as per Reuters poll.

The partially convertible rupee closed at 60.93/94 per dollar compared to 61.18/19 on Friday. The rupee moved in the range of 60.875 to 61.165 during the day. The unit gained 0.4% on Monday, its biggest single-day gain since July 11.

The benchmark indices closed higher, after two days of losses as software services exporters such as Infosys rallied on a weaker rupee while lenders gained a day before the central bank’s policy review.In the offshore non-deliverable forwards, the one-month contract was at 61.32 while the three-month contract was at 61.92.

The new 10-year bond yield closed down 2bps at 8.5%, on expectation that the Reserve Bank will not raise rates when it announces its quarterly monetary policy review on Tuesday. The benchmark five-year swap rate closed down 1bp at 7.89%, while the one-year rate closed 4bps lower at 8.33%.

In call money market, cash rate closed at 7/7.05% against Friday’s close of 7.1/7.15%, after falling to its lowest level since Jan. 2. The U.S. dollar traded steadily against major currencies on Monday, mainly as investors remained in standby mode ahead of key central bank meetings this week.

The Euro declined against the dollar, after investors spent the weekend digesting Friday’s July jobs report and concluded the numbers point to an improving labor market even though the data missed expectations.

The pound rose against the dollar, as investors applauded solid U.K. construction data, though the greenback saw some support from Friday’s U.S. jobs report, which indicated that the U.S. labor market is recovering despite missing expectations.

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