Rupee Returns To 66 Level Against US Dollar: 10 Things To Know
- The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, concluded a three-day meeting on Wednesday, after which it announced a hike of 25 basis points, or 0.25 per cent, in repo rate - the rate at which it lends to commercial banks.
- The central bank cited concerns over inflationary pressures on the back of a sharp rise in global crude prices and evolving macroeconomic situation.
- That marked the first increase in four-and-a half years. The six-member MPC, however, maintained status quo on its stance of 'neutral'.
- The RBI retained growth forecast at 7.4 per cent for 2018-19.
- The central bank raised its inflation projection for the second-half of fiscal 2018-19, which ends in March 2019, to 4.7 per cent from the 4.4 per cent seen earlier.
- "If the current trend of increasing inflation and oil prices continues, we expect another 25 bps hike somewhere during this fiscal year," news agency Reuters cited Sudhakar Pattabiraman, head of research operations at research firm William O'Neil, as saying.
- “We expect short covering in USDINR... The higher interest rate will result in appreciation of Indian rupee against US Dollar which will make imported goods cheaper like gold and crude; we may see a slight downfall from current levels for short term," said Abhishek Bhansal, founder and chairman, ABans Group.
- A relief rally in local equities also supported the recovery momentum. However, bond markets reacted negatively, with the 10-year benchmark bond yield shooting to 7.92 per cent from 7.83 per cent.
- In case of a rate change, the rupee might strengthen to 66.80/90, Salil Datar, CEO and executive director, Essel Finance VKC Forex, had said before release of the RBI's policy statement on Wednesday.
- Petrol and diesel prices were revised marginally lower on Wednesday, the eighth consecutive cut in petrol prices and seventh in eight days in case of diesel. Higher fuel prices lead to a higher inflation reading. Domestic fuel prices are tracking a recovery in global crude oil rates, which had last month hit 2014 lows around $80 per barrel.
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