RTTN: Rupee Advances Against Dollar After RBI Hikes Key Interest Rates
(RTTNews) - The Indian rupee that moved sideways against the U.S. dollar in early deals on Tuesday rallied in late morning trading after the Indian central bank hiked its key interest rates by 50 basis points to curb rising inflation.
The repo, the rate at which the RBI lends, was raised to 8.00 percent from 7.50 percent. The reverse repo, the rate at which the central bank borrows from banks, was adjusted to 7.00 percent from 6.50 percent. Economists had expected a quarter point hike in key rates.
The central bank also raised its inflation outlook to 7 percent from 6 percent for March 2012. Meanwhile, the central bank maintained the baseline projection of real GDP growth at around 8 percent for 2011-12.
The rupee is now worth 44.28 per dollar, compared to yesterday's close of 44.39. If the Indian currency gains further, it will break yesterday's 17-day high of 44.25 and target the 44.20 level.
