RTTN:Indian Rupee Rises To 3-day High Against Dollar
(RTTNews) - The Indian rupee rose to a 3-day high against the US dollar in afternoon deals on Friday on the back of an interest rate hike by the Reserve Bank of India.
In an effort to fight unabating inflation despite heightened risks to growth outlook, India's central bank decided to lift its key interest rates by a quarter point. The decision came in line with economists' expectations.
The central bank raised the repo, the rate at which the RBI lends, to 8.25 percent from 8.00 percent with immediate effect. The reverse repo, the rate at which the central bank borrows from banks, was automatically adjusted to 7.25 percent from 7.00 percent.
This marks the twelfth rate increase since March 2010. The latest move is expected to reinforce the impact of past policy actions to contain inflation and anchor inflationary expectations.
The rupee is now worth 47.3525 per dollar, compared to yesterday's close of 47.5550. If the Indian currency gains further, it may likely target the 47.0 level.
The rupee has appreciated 1.3 percent against the dollar after it reached a fresh 1- 1/2 -year low of 48.0050 early this month.
