Day After Rupee See Record Low, RBI Keeps Repo Rate Unchanged at 6.5%
New Delhi: The rupee on Thursday hit a record intra-day low of 83.4525 to the dollar. This took place while crude oil prices "extended their rise on heightened geopolitical tensions and potential supply risks", Reuters reported. It later recovered 14 paise to close at 83.39.
“We expect the rupee to trade with a slight negative bias on the surge in crude oil and gold prices. Renewed geopolitical tensions in West Asia and selling pressure from FIIs may also weigh on the rupee. However, strength in the domestic equities and reports of selling of dollars by RBI may support the rupee at lower levels,” Anuj Choudhary, research analyst, Sharekhan by BNP Paribas, said according to The Telegraph.
According to PTI, the rupee depreciated 6 paise to 83.45 against the US dollar in early trade on Friday.
Meanwhile, the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) has decided to keep the repo rate unchanged at 6.5% and maintain the policy stance of ‘withdrawal of accommodation’ in the monetary policy.
Both the decisions were taken in a majority 5:1 voting by the six-member MPC, headed behind RBI governor Shaktikanta Das, The Indian Express reported.
“The MPC met on 3rd, 4th and 5th April 2024. After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, it decided by a 5 to 1 majority to keep the policy repo rate unchanged at 6.5% Das said
“Consequently, the standing deposit facility (SDF) rate remains at 6.25 per cent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75% The MPC also decided by a majority of 5 out of 6 members to remain focused on withdrawal of accommodation to ensure that inflation progressively aligns to the target, while supporting growth,” he continued.
The policy repo rate refers to the interest that the RBI charges commercial banks when they borrow from it.
"The MPC on expected lines maintained status quo on rates and stance. While low core inflation provides comfort, the uncertainty on food inflation remains a worry. Further, the higher US yields, higher oil prices and other commodities along with possible delay in Fed's rate easing cycle will keep the MPC wary," Upasna Bhardwaj, chief economist, Kotak Mahindra Bank, said, according to Business Standard.
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