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Rupee snaps three sessions depreciating streak post RBI’s surprise rate hike move

28 Jan 2014 Evaluate

Indian rupee, after opening substantially weak and recouping all the lost ground, ended way stronger below the 63/$ level on Tuesday. The currency which languished near over three month’s low in a knee jerk reaction to RBI’s decision of hiking key policy rates by 25 basis points, snapped three sessions’ losing streak on hopes that there would be no policy rate hike in the near future. RBI, in its third quarter monetary policy document, suggested that further policy steps would be data dependent and that the further policy tightening in the near term was not predictable at this juncture. Additionally, recovery of local equity market aided the appreciation of Indian currency. On the global front, dollar regained a firmer footing against the yen on Tuesday as investors took a breather from a sell-off of stocks and emerging market assets that has driven money into traditional safe haven currencies.

Finally the rupee ended at 62.50, stronger by 60 paise from its previous close of 63.10 on Monday. The currency touched a high and low of 63.18 and 62.50 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 62.98 and for Euro stood at 86.17 on January 28, 2014. While, the RBI’s reference rate for the Yen stood at 61.36, the reference rate for the Great Britain Pound (GBP) stood at 104.6135. The reference rates are based on 12 noon rates of a few select banks in Mumbai.

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