The Indian rupee appreciated 26 paise during the afternoon trade at 79.20 against the US dollar by 12.37 p.m. on Friday, as against 79.46 close on the previous trading session. In the morning trade, the rupee had appreciated more than 50 paise, but as soon as crude oil prices rises the gains has reduced.
At the interbank foreign exchange, the rupee opened at 79.15 against the US dollar, then touched 78.94, registering a gain of 46 paise over the last close in the morning trade. The gains in the local currency was account of persistent inflows by the foreign investors and easing Brent crude oil prices.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies was at 105.75. Brent crude oil prices were trading at $94.84 per barrel. It has gone up in the morning to more than $97 a barrel. The RBI in it’s bi-monthly monetary policy has increased repo rate by 50 basis points to 5.40 per cent to contain inflation.
Consequently, the standing deposit facility rate adjusted to 5.25 per cent and marginal standing facility and the bank rate adjusted to 5.65 per cent. The central bank has retained GDP and inflation forecast at 7.2 per cent and 6.7 per cent, respectively, for the current financial year.
“With inflation expected to remain above the upper threshold in Q2 and Q3, the MPC stressed that sustained high inflation could destabilise inflation expectations and harm growth in the medium term. The MPC, therefore, judged that further calibrated withdrawal of monetary accommodation is warranted to keep inflation expectations anchored and contain the second-round effects,” RBI Governor Shaktikanta Das said.