Rupee falls below 74 against dollar as RBI keeps repo rate unchanged

Rupee falls below 74 against dollar as RBI keeps repo rate unchanged

Rupee falls below 74 against dollar as RBI keeps repo rate unchanged

Rising US interest rates, capital outflows from emerging markets and India's weakening balance of payments and current account deficit are also expected to make the central bank act.

Tweeting in Hindi, the Times of India reported that he said: "The rupee has crossed the 73 mark and price rise is causing an outcry".

The policy repo rate under the liquidity adjustment facility (LAF) remained unchanged at 6.5 per cent.

The greenback soared to a 15-month high against the Singapore dollar and stood tall against other Asian currencies on Thursday (Oct 4), after robust United States economic figures and bullish comments from the Federal Reserve boosted the dollar, prompting sustained regional outflows.

Thirdly, global financial markets remained volatile with EME currencies depreciating significantly.

"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the Monetary Policy Committee (MPC) made a decision to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.5 per cent", RBI said in a statement on Friday.

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The central government and mostly BJP-led states announced a cut in excise and Value-Added Tax rates to reduce fuel prices by 5 per litre.

DBS economist Radhika Rao also predicted a rate hike. "We rule out a hike of 50 basis points, as it may spook the market".

The 10-year gilt yield stood at 8.061%, down from its previous close of 8.157%.

The central bank on Monday said it will infuse Rs 36,000 crore via bond purchases this month to meet the festive season demand for funds. "The RBI is ready to keep real rates high because the policy mandate is to anchor inflation", said Anindya Banerjee, deputy vice president, currency derivatives at Kotak Securities.

US Treasury yields jumped to multi-year peaks on Wednesday, with the 10-year yield reaching a seven-year high after Wednesday's robust data bolstered the case for the Fed to raise interest rates again in December and beyond.

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