RTTN:Indian Rupee Erases Gain Against U.S. Dollar After RBI Decision
The Indian rupee trimmed its initial gains against the U.S. dollar on Wednesday, after the Reserve of India decided to maintain interest rates despite high inflation rate.
The repo rate was left unchanged at 7.75 percent. The bank was expected to hike its rate by 25 basis point.
The RBI maintained the reverse repo at 6.75 percent and the cash reserve ratio at 4.00 percent.
"Given the wide bands of uncertainty surrounding the short term path of inflation from its high current levels, and given the weak state of the economy, the inadvisability of overly reactive policy action, as well as the long lags with which monetary policy works, there is merit in waiting for more data to reduce uncertainty," the bank said in a statement.
The rupee that advanced to a 2-day high of 61.6410 against the greenback immediately after the announcement eased to 62.04 in a short while. The pair was worth 61.94 at yesterday's close.
