Rupee Gains 37 Paise To Close At 81.36 Against US Dollar After RBI Hikes Rates By 50 Bps

At the interbank forex market, the rupee opened at 81.60 against the dollar. It witnessed an intra-day high of 81.17 and a low of 81.69 during the session

The rupee on Friday extended its gains and closed 37 paise higher at 81.36 against US dollar after the Reserve Bank of India (RBI) raised the lending rates by 50 basis points to 5.9 per cent, the PTI reported.

At the interbank forex market, the local unit opened at 81.60 against the greenback. It witnessed an intra-day high of 81.17 and a low of 81.69 during the session. It finally ended at 81.36, up 37 paise from its previous close. On Thursday, the rupee recovered from record lows to settle 20 paise higher at 81.73 against the dollar.

According to the report, the central bank's Monetary Policy Committee (MPC) has raised the benchmark lending rate by 50 basis points, the fourth straight increase since May, as it extended its battle to tame surging inflation. The MPC, comprising three members from the RBI and three external experts, raised the key lending rate or the repo rate to 5.90 per cent, the highest since April 2019, with five out of the six members voting in favour of the hike.

"Rupee strengthened sharply in today's session after the RBI decided to raise rates by 50 bps," said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

The MPC is focused on calibrated withdrawal of accommodation. Inflation trajectory remains clouded with uncertainty and delayed monsoon withdrawal impacting vegetable prices. The Indian economy remains resilient despite global headwinds.

"India's central bank is encouraging state-run refiners to reduce dollar buying in the spot market to contain a sharp fall in the rupee. Dollar retraced from higher levels ahead of core PCE Index number that will be released from the US," Somaiya said, adding that "we expect the USD-INR (Spot) to quote in the range of 81.20 and 82.05." Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, fell 0.42 per cent to 111.78.

Brent crude futures, the global oil benchmark, rose 0.84 per cent to $89.23 per barrel.

In the domestic equity market, the 30-share BSE Sensex jumped 1,016 points (1.80 per cent) to close at 57,426 points, while the broader NSE Nifty rose 276 points (1.64 per cent) to 17,094 points.

Foreign Institutional Investors (FIIs) were net sellers in the capital markets as they offloaded shares worth Rs 3,599.42 crore on Thursday, according to exchange data.