Rupee rises to 88.69/$ as MPC holds rates; RBI to 'closely watch' currency

Indian Rupee today: The domestic currency closed 10 paise higher at 88.69 on Wednesday against the greenback

The Indian Rupee advanced after two days of consecutive closing lows as the Reserve Bank of India's (RBI) Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.5 per cent.  

 

The domestic currency closed 10 paise higher at 88.69 on Wednesday against the greenback, according to Bloomberg. The currency fell 3.6 per cent so far this year, while it hit an all-time low of 88.80 on Tuesday. 

 

While keeping the repo rates unchanged, the MPC maintained the policy stance at ‘neutral’. RBI Governor Sanjay Malhotra noted that the effects of the front-loaded monetary policy measures and recent fiscal actions were still unfolding.  The committee also revised its growth forecast for FY26 upward to 6.8 per cent while lowering the inflation forecast to 2.6 per cent. 

Rupee gained as the RBI kept rates unchanged but highlighted its strong focus on maintaining rupee stability on the global front, Jateen Trivedi, VP research analyst - commodity and currency, LKP Securities, said. "The central bank emphasised its readiness to take appropriate steps on the rupee as warranted, while also outlining measures to ensure a healthy and liquid banking system." 

 

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In the post-policy press conference, the Governor said that the RBI does not target any specific rupee level and the efforts have been focused on managing undue volatility. Malhotra said that the central bank will keep a close watch on the rupee movement after the recent depreciation

 

Further, on expanding rupee reference rates, the objective is to minimise the use of cross-currencies for rate discovery, the RBI said. "We are currently looking at the Indonesian Rupiah and the UAE Dirham, among others, and will continue to add more gradually." 

The RBI further assured active management of short-term rates via two-way liquidity operations, Trivedi noted. "These supportive remarks helped the rupee recover, with a range now expected between 88.25-89.10."

 

Meanwhile, the dollar index traded slightly lower amid concerns that US shutdown fears could delay the release of Friday's nonfarm payrolls data. The measure of the greenback against a basket of six major currencies was down 0.04 per cent at 97.73.

 

In commodities, crude oil prices extended losses as investors weighed the prospect of an Opec+ output hike against shrinking US crude inventories. Brent crude price was down 0.95 per cent at 65.40 per barrel, while WTI crude prices were lower by 0.91 per cent at 61.80 per barrel, as of 3:30 PM IST.