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Indian Ruppee

Rupee falls sharply as RBI's hawkish tone hurts

The rupee lost 9 paise ahead of the Reserve Bank of India's mid mid-quarter monetary policy announcement. 

Rupee opened at 53.88 in the morning and fell to 53.97. The market is expecting a 25 basis points cut in repo rate. Repo rate is the rate at which the Reserve Bank of India lends to banks. 

On Thursday rupee closed at 53.82 levels yesterday.

"Rupee has lost because of the hawkish stance by the Reserve Bank of India although a 25 basis point cut is already factored in," said a market dealer. "Also ECB cutting rates by 25 basis oints has led to rupee weakening in line with the Euro."

RBI hinted at very limited space to ease rates with the growth slowing down, current account deficit remaining high and capital flows reversing. An ET poll of 15 economists and traders has forecasted a 25-basis-point cut in repo rate - the rate at which RBI lends to banks- to 7.25%. One basis point is one hundredth of a percentage.

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