Rupee closes higher as RBI MPC keeps repo rate unchanged; ends at 87.73/$

Indian Rupee today: The domestic currency closed 7 paise higher at 87.73 against the dollar on Wednesday, according to Bloomberg

The Indian Rupee traded steady with gains on Wednesday after the Reserve Bank of India remained status quo on its repo rate and maintained its neutral amid tariff uncertainities. 

 

The domestic currency closed 7 paise higher at 87.73 against the dollar on Wednesday, according to Bloomberg. The rupee has declined 2.6 per cent so far in the calendar year and recorded its worst monthly fall in July since September 2023. 

 

The Reserve Bank of India’s Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra, on Wednesday decided to keep the benchmark repo rate unchanged at 5.5 per cent. The central bank said that the Rupee will remain volatile amid the trade tensions with the US. 

 

 

The FY26 inflation forecast has been eased to 3.1 per cent, down from 3.7 per cent, with Q2 FY26 dropping to 2.1 per cent from 3.4 per cent. However, inflation is expected to climb back toward 4.9 per cent in the first quarter of the next financial year (FY27) as the low base fades.

 

The RBI has kept its real gross domestic product (GDP) growth forecast for FY26 unchanged at 6.5 per cent.  

 

On the tariffs front, US President Donald Trump ramped up trade tensions with India with his decision to raise tariffs on India "substantially in the next 24 hours" over its continued imports of Russian oil.

 

He also said that tariffs on semiconductors and pharmaceutical imports will be announced within the next week. Pharmaceutical products will see their tariff rate jump as high as 250 per cent within 12 to 18 months, Trump told CNBC. The dollar index, the measure of the greenback against a basket of six major currencies, was down 0.07 per cent at 98.71. 

 

Markets are closely watching how long the RBI will continue to defend the currency, as US President Donald Trump pushes for additional tariffs on India due to the lack of resolution over its Russian oil purchases, Anil Kumar Bhansali, head of treasury and executive director at Finrex Treasury Advisors LLP, said. "Until then, the rupee may remain range-bound, with the RBI defending the 88 level, while foreign portfolio investors (FPIs) and oil companies continue buying dollars."

 

FPIs have been net sellers of domestic equities for the eleventh straight session on Tuesday, totalling nearly ₹35,000 crore, according to provisional data from NSE. 

 

In commodities, crude oil prices fell to a one-month low with the Russian crude buyer sanctions in focus. Brent crude price was up 1.46 per cent at 68.63 per barrel, while WTI crude prices were higher by 1.50 per cent at 66.14, as of 3:45 PM IST.