Mumbai: The Indian rupee gained against the US dollar after the Reserve Bank of India (RBI) announced a 0.25 percentage point cut in both the repo rate and the cash reserve ratio.
After opening at Rs.53.94 per dollar the rupee had weakened to Rs.53.96 per dollar, but rose to Rs.53.65 per dollar as soon as RBI announced the cut. At 11.55am the rupee was at Rs.53.71 per dollar up 0.4% from Monday’s close.
“Rupee has gained because the RBI cut has impacted market sentiment positively. The stock market is also firm and the rupee has risen since morning on hopes that foreign funds will continue to invest in India,” said N.S. Venkatesh, treasurer at IDBI Bank Ltd.
So far in January, foreign funds have bought $3.3 billion worth of Indian stock, a record for the month. Venkatesh expects the rupee to gain to Rs.52 per dollar by March.