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Rupee ascends in thin trade despite RBI’s interest rate cut

17 Apr 2012 Evaluate

Supported by rise in the euro Indian rupee pulled up and continued trading in low volume on Tuesday, even after RBI has cut interest rate for the first time in three years by an unexpectedly sharp 50 basis points to give a boost to flagging economic growth. Local currency not excited with the central bank’s move as it warned that there is limited scope for further rate cuts. Meanwhile cash reserve ratio, the percentage of deposits kept by banks with RBI, was left unchanged at 4.75%. The consistent fall in the rupee hurts RBI’s ability to rapidly cut rates to stimulate growth. However euro held gains after short-covering helped it pull back from two-month lows against the dollar and the yen the previous day, but is still seen as vulnerable ahead of a Spanish bond auction.

The partially convertible currency is currently trading at 51.60, stronger by 8 paise from its previous close of 51.68, on Monday. It has touched a high and a low of 51.66 and 51.51 respectively. The Reserve Bank of India's (RBI) reference rate for the dollar stood at Rs 51.65 and for Euro it stood at Rs 67.18 on April 16, 2012. While, the RBI's reference rate for the Yen stood at 64.17 the reference rate for the Great Britain Pound (GBP) stood at 81.7969. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

Date1US$1GBP

April 16, 2012

51.6581.7969

April 13, 2012

51.4181.9338
(RBI-Reference Rate) 

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