NEW DELHI: The
rupee on Friday continued to fall and plunged to a new record low, breaching the 74-mark against the US dollar. The Indian currency fell to a new low of 74.23 (intra-day) after the Reserve Bank of India (RBI) kept key policy rates on hold.
However, the currency finally settled at 73.76 against the US dollar, down 18 paise against its previous close of 73.58.
In a surprise move, the Reserve Bank today kept its lending rates unchanged. The central bank maintained a status quo and kept repo rate unchanged at 6.50 per cent. Reverse repo rate stayed at 6.25 per cent.
Against Street expectations, RBI keeps repo rate unchanged at 6.50 per cent
RBI, in its October monetary policy meet, maintained a status quo and kept the repo rate unchanged at 6.50 per cent. The reverse repo rate has also been kept unchanged at 6.25 per cent. The central bank's move came against the Street expectations as most of the experts had predicted a 25 basis points (bps) rate hike due to a weakening rupee and inflationary pressure due to high crude oil prices.
While addressing the media after the policy meet, RBI governor Urjit Patel said that the
rupee fall is moderate in comparison to emerging markets peers.
The rupee has fallen 13.5 percent in 2018, making it Asia’s worst-performing currency. The rupee has slumped in recent months amid a global rise in oil prices and a sell-off in emerging markets.
Not targeting any particular rupee level, says RBI
"The RBI's response to these unsettled conditions has been to ensure the foreign exchange market remains liquid with no undue volatility," the central bank's governor, Urjit Patel, said after monetary policy meeting.
Investors remained concerned over sustained foreign capital outflows and fears of widening current account deficit (CAD) in the wake of rising crude oil prices.
In early trade, the rupee had recovered 6 paise to 73.52 against the US currency at the forex market ahead of the RBI's monetary policy outcome amid fresh selling by exporters as the government stepped in to reduce oil prices.
Meanwhile, markets today crashed nearly 800 points amid decline in the rupee. The benchmark BSE Sensex closed 792 points lower at 34,377 and broader NSE Nifty finished 283 points down at 10,316.
