Rupee Climbs 11ps To 85.68%

Mumbai: The rupee pared initial losses and appreciated 11paise to close at 85.68 against the US dollar on Friday, after the Reserve Bank cut repo rate by a higher-than-expected 50 basis points to prop up growth. Forex traders said the rupee traded on a flat-to-positive note as the RBI surprised the market with a jumbo rate cut. Besides, the rate cut supported by a phased 100 basis points CRR reduction will lower the borrowing costs and boost growth. Moreover, a surge in the domestic markets supported the rupee at lower levels with both the indices settling with gains of over 1 per cent. At the interbank foreign exchange, the domestic unit witnessed heavy volatility.

It opened at 85.91, registering a fall of 12paise over its previous close. But soon pared the losses and saw an early high of 85.66 against the greenback. During Friday’s trade, the rupee also saw an intra-day low of 86 and finally settled for the day at 85.68, up 11paise over its previous close. On Thursday, the rupee snapped its two-day losing streak and closed 8 paise higher at 85.79 against the US dollar. The RBI slashed interest rate by 50 basis points on Friday, a third consecutive reduction, and unexpectedly reduced the cash reserve ratio (CRR) for banks to provide a major liquidity fillip to support the economy amid geopolitical and tariff headwinds. The central bank retained GDP growth projection for the current fiscal at 6.5 per cent. It also changed its monetary policy stance to ‘neutral’ from ‘accommodative’, with Malhotra saying further action will depend on incoming data.