The Indian rupee closed stronger after the Reserve Bank of India's monetary policy committee kept the benchmark rates unchanged while unleashing measures to boost liquidity.
The domestic currency strengthened 3 paise to close at 84.70 against the dollar, according to Bloomberg data. The rupee closed at 84.73 against the greenback on Thursday.
The central bank raised the interest rate ceiling on one-year FCNR deposits by 200 basis points to 400 basis points in a move to attract more capital inflows. Ceiling on FCNRB deposit rates on 3-5 year maturity also increased. FCNRB deposit rate relaxation will be available till March 31, 2025.
The RBI also announced it would cut CRR by 50 basis points to 4%. The central bank will cut CRR in two tranches in fortnights beginning Dec. 14 and Dec. 28 at 25 basis points each. The CRR cut will result in a liquidity increase of Rs 1.16 lakh crore.
The Reserve Bank of India has cut the real GDP growth for the ongoing fiscal year to 6.6% from 7.2% earlier.
The rupee could gain support from the RBI's efforts to manage liquidity in the banking system, according to Amit Pabari, Managing Director, CR Forex Advisors. "We anticipate the rupee's downside to remain capped at 85, with the USDINR pair expected to trade within the range of 84.50 to 85 in the short term."
The dollar index—which tracks the greenback's performance against a basket of 10 leading global currencies—was trading 0.12% higher at 105.83.
International benchmark Brent oil was priced 0.33% down at $71.85 per barrel after the US imposed more sanctions on Iranian crude. West Texas Intermediate was up 0.29% lower at $68.10 a barrel.
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