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Rupee ends higher against dollar as RBI hikes repo rate

05 Aug 2022 Evaluate

Erasing previous session drubbing, Indian rupee ended significantly higher against dollar on Friday, after the Reserve Bank hiked interest rates by 50 basis points in an effort to cool stubbornly high inflation and defend the rupee. RBI decided to hike the repo to 5.4 per cent, crossing the pre-pandemic level of 5.15 per cent. MPC decided to focus on withdrawal of accommodation to keep inflation within target while supporting growth. Further, RBI Governor Das said that India's foreign exchange reserve still strong, and are the 4th highest globally. Meanwhile, in order to deal with a sudden increase in imports, India and Mauritius have agreed to include provisions related to the automatic trigger safeguard mechanism in their trade pact. On the global front, dollar edged higher on Friday, attempting to recoup some losses after its sharpest daily drop in more than two weeks, as traders turned their attention to U.S. jobs data for further clues about the strength of the economy.

Finally, the rupee ended at 79.24 (provisional), stronger by 16 paisa from its previous close of 79.40 on Thursday. The currency touched a high and low of 79.29 and 78.94 respectively.

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