Indian rupee ended stronger against the US dollar on Wednesday, as the RBI’s Monetary Policy Committee decided to hike its key policy rate, the repo rate, by 25 basis points to 6.25 per cent, in its second bi-monthly meeting for the fiscal. This was its first hike in four-and-half-years. Such a rate hike can send a signal for foreign investors that the returns in India could be going up. Hence, FPI flows could look positively now considering that they have been negative so far this year. Some optimism also spread among the investors with World Bank’s report stating that India is projected to regain its position as the world’s fastest-growing major economy advancing 7.3 per cent this fiscal year and 7.5 per cent in the next two ‘as factors holding back growth in India fade’. Moreover, persistent foreign capital inflows into equity market along with dollar’s weakness against some currencies overseas amid lingering concerns about global trade, gave the uptrend some momentum. On the global front, euro rose to a ten-day high on Wednesday, after hawkish comments from the European Central Bank, adding upward pressure to bond yields and sinking some stocks as worries over Italy also weighed.
Finally, the rupee ended at 66.93, 22 paise stronger from its previous close of 67.15 on Tuesday. The currency touched a high and low of 67.16 and 66.88 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 67.03 and for Euro stood at 78.67 on June 06, 2018. While, the RBI’s reference rate for the Yen stood at 61.02, the reference rate for the Great Britain Pound (GBP) stood at 89.94. The reference rates are based on 12 noon rates of a few select banks in Mumbai.
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