The Indian rupee recoiled heavily today after plunging to six-and-half-month low in September as the Reserve Bank of India kept the key policy rates unchanged
The Indian rupee recoiled heavily today after plunging to six-and-half-month low in September as the Reserve Bank of India kept the key policy rates unchanged. The rupee advanced as much as 49 paise to end at 65.01 per unit US dollar on Wednesday. During the day, the Indian rupee shuttled between the range of 64.95-65.38 against a piece US dollar. The domestic currency gained 17 paise in the early morning trade to 65.33 against the dollar before ahead of the announcement of RBI’s monetary policy review.
Yesterday, the rupee dropped by 22 paise to close at 65.5 against the dollar amid rising expectations of a rate hike by the US Federal Reserve. The Reserve Bank of India’s fourth bi-monthly monetary and credit policy review comes at a time when the government is grappling with a slowing economic growth, whereas the central bank is staring at a rising headline inflation. The RBI’s 6% repo rate, last revised in August, is lowest in nearly seven years since November 2010.
The central bank kept the policy stance neutral with the objective of limiting the medium-term target for consumer price index (CPI) inflation of 4% within a band of +/- 2% while supporting growth. The Reserve Bank of India today fixed the reference rate of the rupee at 65.2899 against the US dollar and 76.8266 for the euro. The corresponding rates were 65.5529 and 76.7756, yesterday.
Meanwhile, Sensex and Nifty ended higher on Wednesday after welcoming the Reserve Bank of India’s move to keep the repo rates unchanged at 6% in its latest bi-monthly monetary policy today. BSE Sensex gained 174 points to close at 31,671.71 points and NSE Nifty jumped 55 points to finish at 9,914.9 points. In the intraday trade, the benchmark Sensex advanced as much as 230 points to hit the day’s high of 31,752.16 points while NSE Nifty added 79 points to mark the day’s high of 9,938.3 points.
However, the Indian rupee is reeling under pressure since last month, it made a six-and-half month low of 65.89 per US dollar in late September. The exit of foreign institutional investors continues to weigh on the forex market as they remain to be in exit mode and pulled out over Rs 11,000 crore from Indian equities in September against the backdrop of heightened geopolitical worries amid concerns over corporate earnings growth.