TH:Rupee falls to 54.15 as RBI keeps policy rates unchanged
The rupee pared its early gains and fell to 54.15, minutes after the Reserve Bank of India (RBI) held fort on policy rates.
The central bank has cut the cash reserve ratio or the slice of deposits banks keep with the RBI by 25 basis points to 4.25 per cent. This will help boost the liquidity in the banking system. RBI, however, left the key interest rates unchanged.
At 1.05 pm, the local unit was trading steady at 54.05 per dollar. It opened a tad lower at 54.10 but quickly recovered to 53.86 in early trade on heightened hopes of a policy rate cut by the RBI.
On Monday, the rupee had closed at 54.08 on the back of a weak euro and oil-related dollar demand.
Moses Harding, Head Alco and Economic & Market Research, IndusInd Bank, said: “The impact of the CRR cut is neutral on rupee exchange rate to extend its consolidation mode at 53.20-54.20.”
Also, the Finance Minister, P Chidambaram on Monday said that the Government will take necessary steps to control the fiscal deficit. Fiscal consolidation had been one of the key demands of RBI’s top officials before affecting a rate cut.
Oil-related dollar demand may continue to exert some pressure on the rupee today. A depreciating rupee makes imports costlier, which is detrimental to the interests of an import-dependent country like India.
Call rates, G-Secs
The inter bank call rates opened a tad higher at 8.10 per cent (previous close: 8 per cent). At 11.25 am, the rates were trading flat at 8.10 per cent.
The 8.15 government security, which matures in 2022, opened higher at Rs 100.15 (yield: 8.12 per cent) from the previous close of Rs 100.09 (yield: 8.13 per cent). At 11.25 am, it was trading at Rs 99.90 and the yields rose sharply to 8.16 per cent.
“10-Year bond yields will get into the consolidation mode at 8.12-8.17 per cent with March 2013 target at 8.02-7.97 per cent,” Harding said.
