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Rupee rises 12 paise to 81.61 against US dollar after RBI monetary policy announcement

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Rupee rises 12 paise to 81.61 against US dollar after RBI monetary policy announcement

Mumbai: The rupee witnessed range-bound movement on Friday and was trading 12 paise higher at 81.61 against the American currency after RBI monetary policy announcement.

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At the interbank foreign exchange, the domestic unit opened at 81.60 against the dollar, and witnessed an early high of 81.45 and a low of 81.69.

It was trading at 81.61 against the American currency at noon, registering a gain of 12 paise over its previous close.

On Thursday, the rupee recovered from a record low to settle 20 paise higher at 81.73 against the dollar.

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The Reserve Bank of India (RBI) on Friday raised the benchmark lending rate by 50 basis points to 5.90 per cent in a bid to check inflation, which has remained above its tolerance level for the past 8 months.

With the latest hike, the repo rate or the short-term lending rate at which banks borrow from the central bank is now close to 6 per cent.

"Decision widely expected and no negative surprises has supported the rupee and stock markets strength after the announcement," Sriram Iyer, Senior Research Analyst - Currency & Commodity at Reliance Securities, said.

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However, the appreciation bias could be limited as the US Fed will continue to hike the interest rate by another 125 bps till the end of the year to contain the stubbornly high inflation.

"Moreover, domestic inflation will continue to remain sticky, which will prompt the central bank to remain hawkish on rates with the final terminal rate close to 6.50 per cent to 6.75 per cent till FY23," Iyer said.

While announcing the latest monetary policy, RBI Governor Shaktikanta Das said the rupee movement is orderly against the US dollar and the local unit depreciated only 7.4 pc this year till September 28.

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"RBI does not have a fixed exchange rate for rupee and it intervenes in the market to curb excessive volatility," Das said.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.32 per cent to 111.90.

Brent crude futures, the global oil benchmark, fell 0.12 per cent to USD 88.32 per barrel.

In the domestic equity market, the 30-share BSE Sensex was trading 469.62 points or 0.83 per cent up at 56,879.58 points and the broader NSE Nifty rose 138.70 points or 0.82 per cent to 16,956.80 points. 

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