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Rupee hold onto its ground despite a shocking 50 bps rate hike by RBI

26 Jul 2011 Evaluate

Capturing substantial ground, Indian rupee gained strength on Monday supported by dollar weakness against other major currencies overseas. A higher opening in the stock market amidst the strength of the regional counterparts also buoyed the sentiment for the local currency. The dollar hit a record low against the Swiss franc and a four-month trough versus the yen on Tuesday, as investors remained sceptical that U.S. President Barack Obama's call for compromise would lead to a swift breakthrough in deadlocked debt talks.

However, the Indian currency held its ground despite the bigger than expected rate hike declared by the RBI in its monetary policy review, which led to drastic losses into the Indian equity markets. India’s Centeral Bank’s hike the key rates by 50 bps which was against the street expectation of 25 bps. Thus, with this the repo rate and the reverse repo rate now stand at 8% and 7% respectively.

The partially convertible Rupee is currently trading at 44.29, stronger by 11 paise from its previous close of 44.40 on Monday. It has touched a high and low 44.33 and 44.27 respectively. The Reserve Bank of India's reference rate for the dollar stood at 44.41 and for Euro it stood at 63.86 on July 25, 2011. While, the RBI's reference rate for the Yen stood at 56.67 and the reference rate for the Great Britain Pound (GBP) stood at 72.4914. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

Date1US$1GBP
July 25,201144.41 72.4914
July 22,201144.3772.3422

(RBI-Reference Rate)

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