Rupee slumps 76 paise to 69.17 vs USD post RBI policy

Mumbai, Apr 4 (PTI) Halting its three-day winning run, the rupee plunged 76 paise Thursday to close at 69.17 against the US dollar after the RBI cut the interest rate but kept its monetary policy stance ‘neutral’.

In its first bi-monthly policy review for this financial year, the central bank slashed the policy rate by 0.25 per cent for the second time in a row, following which the rupee and sovereign bond prices tumbled.

At the Interbank Foreign Exchange (forex) market, the domestic currency opened lower at 68.56 per dollar and fell further to touch the day’s low of 69.21. It finally settled at 69.17, down 76 paise over its previous close.

The rupee had surged by 33 paise to 68.41 against the US dollar Wednesday.

“Rupee and sovereign bond tumbled after participants perceived the policy as less dovish than expected…the yield on the benchmark 10-year bond was up 6 basis points to 7.34 per cent,” said V K Sharma, Head PCG and Capital Markets Strategy, HDFC Securities.

Rising crude oil prices and strengthening of the greenback against other major currencies overseas also weighed on the domestic unit, forex traders said.

Brent crude futures, the global oil benchmark, climbed 0.39 per cent to USD 69.58 per barrel.

The dollar index, which gauges the greenback’s strength against a basket of six currencies, rose 0.09 per cent to 97.17.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 226.19 crore Thursday, as per provisional data.

Markets closed in the red Thursday after the RBI lowered GDP growth forecast for 2019-20 and kept its monetary policy stance ‘neutral’ amid uncertainty over monsoon.

The 30-share BSE Sensex index settled 192.40 points, or 0.49 per cent, lower at 38,684.72. The broader NSE Nifty slipped below the 11,600 mark, ending 45.95 points, or 0.39 per cent, down at 11,598.

Meanwhile, Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 68.8446 and for rupee/euro at 77.3878. The reference rate for rupee/British pound was fixed at 90.7675 and for rupee/100 Japanese yen at 61.82.

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