Rupee gains 13 paise to 85.66 against US dollar after RBI cuts repo rate by 50 bps; slashes CRR by 1%; to boost liquidity
NEW DELHI: Rupee recovered early losses and rose by 13 paise on Friday morning trade, following the
Reserve Bank of India
's surprise 50 basis points
repo rate cut
economic growth.
Forex traders said the RBI's latest policy takes a well-rounded approach, it aims to support economic growth with a 50 bps rate cut, improve liquidity through a 1% CRR reduction, and control inflation with a target of 3.7% for FY26.
The domestic currency experienced significant fluctuations at the interbank foreign exchange. Opening at 85.91, it initially dropped 12 paise from its previous close, but subsequently recovered to reach 85.66 against the dollar.
Earlier on the day, the Monetary Policy Committee reduced the benchmark policy rate by 50 basis points to 5.5%, stating that early rate reductions would boost economic growth.
The Reserve Bank maintained its GDP growth forecast at 6.5% for the current fiscal year.
The central bank also implemented a significant 1% reduction in Cash Reserve Ratio, which will release Rs 2.5 lakh crore of liquidity for banks to lend to productive economic sectors.
The dollar index, measuring the US currency against six major currencies, increased by 0.07% to 98.81.
Global oil benchmark Brent crude futures declined 0.52% to USD 65.00 per barrel. In domestic equity markets, the Sensex recovered from early losses to trade 747.11 points or 0.92% higher at 82,189.15, while the Nifty rose 244.70 points or 0.99% to 24,995.80.
The rupee had ended 8 paise higher at 85.79 against the US dollar on Thursday, breaking its two-day decline.
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