Rupee rallies 81 paise to 74.35 against USD after RBI announced measures to support economy

The Indian rupee appreciated by 81 paise to 74.35 against the US dollar in intra-day trade on Friday, after the Reserve Bank announced various measures including a 75 basis point cut in repo rate to support the economy amid the coronavirus-induced crisis.

The Reserve Bank of India (RBI) on Friday cut benchmark interest rate by 75 basis points to 4.4 per cent. The central bank also reduced the cash reserve ratio (CRR) of all banks by 100 basis points to 3 per cent with effect from March 28 for 1 year.

RBI Governor Shaktikanta Das said all instruments - conventional and unconventional - are on table to support financial stability and revive growth and noted that Rs 3.74 lakh crore liquidity will be injected into system through various measures announced on Friday.

Forex traders welcomed the RBI initiatives and said the measures showed that the central bank is willing to take steps to fight the COVID-19 pandemic.

The rupee which opened on a positive note at 74.60, gained further momentum and touched a high of 74.35 against the US dollar, registering a rise of 81 paise over its previous close.

On Thursday, rupee had settled at 75.16 against the US dollar.

The domestic stimulus measures announced by the RBI boosted investor sentiment. However, there are still concerns over the impact of coronavirus outbreak on the domestic as well as global economy.

The number of deaths around the world linked to the new coronavirus has crossed over 24,000. In India, more than 700 coronavirus cases have been reported so far.

Meanwhile, domestic bourses were trading on a muted note with benchmark indices Sensex trading 71.99 points lower at 29,874.78 and Nifty up by 37.10 points at 8,678.55.

Foreign institutional investors (FIIs) remained net sellers in the capital market, as they sold equity shares worth Rs 484.78 crore on Thursday, according to provisional exchange data.

Brent crude futures, the global oil benchmark, rose 0.80 per cent to USD 26.65 per barrel.

Meanwhile, the dollar index, which gauges the greenback's strength against the basket of six currencies was trading 0.38 per cent lower at 98.97.

The 10-year government bond yield was at 6.05 per cent in morning trade.