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Rupee gives up all its last session gains on increased dollar demand

02 Jun 2015 Evaluate

Indian rupee after a day of strong gains, once again turned lower on Tuesday as demand for dollar increased. The rupee made a cautious start ahead of the RBI’s second Bi-monthly Monetary Policy announcement and turned lower along with the equity markets, after RBI cut its policy repo rate by 25 basis points and cautioned about inflation risks if monsoon rains disappoint. Sentiment was also hurt by lack of any fresh measures to free up cash-strapped commercial banks’ liquidity. The RBI governor later said that central bank will only move in on the rupee when there is strong flow of dollars. On the global front, the dollar strengthened against a basket of major currencies and surged to a more-than 12-year high against the Japanese yen.

Finally the rupee ended at 63.83, 12 paise lower from its previous close of 63.71 on Monday. The currency touched a high and low of 63.96 and 63.66 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 63.83 and for Euro stood at 69.73 on June 2, 2015. While, the RBI’s reference rate for the Yen stood at 51.21, the reference rate for the Great Britain Pound (GBP) stood at 97.1028. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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