Rupee falls 5 paise to close at 89.94 against US dollar after RBI cuts repo rate
Mumbai (PTI): The rupee on Friday gave up its initial gains and settled for the day lower by 5 paise at 89.94 (provisional) against US dollar, after the Reserve Bank cut key benchmark interest rate for the first time in six months.
Forex traders said the Reserve Bank of India's (RBI) rate cut will weigh on the rupee, but RBI's decision to purchase government bonds worth up to Rs 1 lakh crore through open market operations (OMO), combined with a USD 5 billion buy-sell swap, will support the local currency.
At the interbank foreign exchange market, the rupee opened at 89.85 against the US dollar and gained ground, touching 89.69 in morning deals, registering a 20-paise gain from its previous close.
After the RBI's monetary policy announcement, the rupee lost ground and fell to 90.06 against the American currency, a 16-paise decline from its previous close of 89.89. The currency is down almost 5 per cent against the dollar this year, the worst performer in Asia.
The local unit finally settled for the day lower by 5 paise at 89.94 (provisional) against the American currency.
"Beyond the rate cut, RBI's decision to purchase government bonds worth up to Rs 1 lakh crore through OMO, combined with a USD 5 billion buy-sell swap, marks a decisive effort to restore durable liquidity and stabilize currency markets after the rupee's sharp depreciation," said Sachin Bajaj, Executive Vice President & Chief Investment Officer, Axis Max Life Insurance.
The RBI on Friday cut the key benchmark interest rate for the first time in six months and took steps to boost liquidity to support a "goldilocks" economy amid high US tariffs.
Reserve Bank Governor Sanjay Malhotra said the central bank does not target any band for the rupee in the forex market, and allows the domestic currency to find its own correct level.
"We don't target any price levels or any bands. We allow the markets to determine the prices. We believe that markets, especially in the long run, are very efficient. It's a very deep market," he said while replying to a question on rupee depreciation at a post-monetary policy press meet.
Malhotra said fluctuations in the market keep occurring, and the RBI's effort is always to reduce any abnormal or excessive volatility. "And that is what we will continue to endeavour," he added.
In its bi-monthly monetary policy, the RBI announced three-year USD/INR Buy Sell swaps of USD 5 billion this month. When asked if this is aimed at checking rupee depreciation, Malhotra said, "It is a liquidity measure. It is not to support the rupee".
The governor further said the country has sufficient foreign exchange reserves and that the current account is manageable, and that, given the strong fundamentals of the economy, the country should witness strong capital flows going forward.
Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.03 per cent lower at 98.96.
Brent crude, the global oil benchmark, rose 0.02 per cent to USD 63.27 per barrel in futures trade.
On the domestic equity market front, Sensex jumped 447.05 points to settle at 85,712.37, while the Nifty climbed 152.70 points to 26,186.45.
Foreign institutional investors sold equities worth Rs 1,944.19 crore on a net basis on Thursday, according to exchange data.
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Inappropriate for MLAs seeking free IPL tickets, says D.K. Suresh
Bengaluru: Bengaluru Milk Union Ltd President D.K. Suresh on Monday said it is inappropriate for MLAs to seek free IPL tickets, adding that those interested in watching matches should pay for them personally.
Speaking to reporters near his residence in Sadashivanagar, he said, “IPL is a commercial tournament and does not represent the country. It is not right for public representatives to focus too much on such matters.”
Referring to the recent controversy during the RCB celebrations, he said, “let us find out who benefited the most from the statements made during the incident.” He also pointed out that BJP MLAs had received IPL tickets as well.
Responding to discussions about relocating the Chinnaswamy Stadium, Suresh said the government has already approved the construction of a new stadium at a location he had proposed.
“I had suggested building a stadium in Surya City and submitted a proposal for it. Bengaluru needs four stadiums in four directions to cater to its growing population and encourage youth participation in sports,” he said.
He noted that apart from Kanteerava Stadium, KSCA, and the Football Stadium, there are limited facilities in the city.
“When I was a Lok Sabha member, I had proposed allocating 100 acres in my constituency at Surya City. The land was later earmarked and the plan approved,” he added.
Suresh said he has discussed the project with Minister Zameer Ahmed Khan, Rajiv Gandhi Housing Corporation Chairman Shivalingegowda, and Anekal MLA Shivanna.
“The Cabinet has now approved the project, and a stadium will be developed on around 50–60 acres,” he said.
He further added that he has requested the Deputy Chief Minister to build another stadium at Shivarama Karanth Layout through the BDA, where 40 acres have been allocated. Plans are also being discussed to develop a well-equipped stadium in Bidadi.
Commending state government's recent bilingual policy move, Suresh said forcing children to learn three languages could affect their comprehension.
“It is a good decision to make two languages compulsory. Learning a third language should be left to the choice of students and parents,” he said.
Responding to criticism from BJP leaders, he said their tendency is to oppose every decision of the government.
“To please their central leadership, they take a pro-Hindi stance. Instead, they should advocate for the adoption of Kannada in all states,” he said.
When asked about the earlier three-language policy under Congress, he said, “the situation is different now. Today, the focus should be on quality learning. Kannada should remain the primary language, while students and parents can choose an additional language.”
