Rupee ends one-month high against US dollar after rate cut by RBI

Indian rupee ended one-month high against US dollar on Tuesday after the Reserve Bank of India (RBI) has decided to cut its key policy rate, or the repo rate, by 25 bps to 6.25 per cent. Local currency also got some support with the World Bank's statement that India's GDP growth will remain strong at 7.6 percent in 2016 and 7.7 percent in 2017. According to World Bank, the growth will be supported by expectations of a rebound in agriculture, civil service pay reforms supporting consumption, increasingly positive contributions from exports and a recovery of private investment in the medium term. Further, firm domestic equity market also supported the rupee, but the dollar strengthened against some currencies overseas capped the rupee gains. On the global front, yen weakened against the dollar on data suggesting the US manufacturing sector grew more than expected in September.

Finally, the rupee ended at 66.46, 12 paise stronger from its previous close of 66.58 on Monday. The currency touched a high and low of 66.60 and 66.39 respectively. The Reserve Bank of India’s (RBI) reference rate for the dollar stood at 66.55 and for Euro stood at 74.44 on October 4, 2016. While the RBI’s reference rate for the Yen stood at 65.08, the reference rate for the Great Britain Pound (GBP) stood at 85.31.The reference rates are based on 12 noon rates of a few select banks in Mumbai.