Mumbai: The rupee surged by seven paise against the greenback today after the Reserve Bank made money supply tight through a 0.5% hike in the Cash Reserve Ratio (CRR), amid strong equity markets.
Dealers said the hike, which will come into effect in two tranches of 0.25% on 26 April and 10 May, is likely to tighten money supply in the banking system and resulted in appreciation of the rupee against the dollar.
In fairly active trade at the Interbank Foreign Exchange (forex) market, the local currency resumed firm at 39.85/86 a dollar from its last close of 39.92/93 a dollar and later was quoted at 39.88/89 a dollar in late morning trade.
The measure, which would suck out liquidity to the tune of Rs18,500 crore from the banking system, was taken by the central bank to tame inflation.
Asian stocks also rallied sharply in early trade while Indian benchmark Sensex spurted by 239 points at 1030 hours today. PTI JCG DK KM