scorecardRupee rebounds 24 paise as RBI maintains accommodative stance
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Rupee rebounds 24 paise as RBI maintains accommodative stance

Rupee rebounds 24 paise as RBI maintains accommodative stance
Business2 min read
Mumbai, Dec 5 () The Indian rupee rose sharply in the last hour of trade to settle 24 paise higher at 71.29 to the US dollar on Thursday after the RBI promised to continue with accommodative stance in its monetary policy.

The central bank, however, decided to keep key interest rate unchanged in its fifth bi-monthly monetary policy for this ongoing fiscal, a move that widely surprised investors who were expecting at least 25 basis points cut in policy rate.

The Indian unit traded on a flat note for a better part of the session but briefly fell post RBI monetary policy announcement. It recovered swiftly mainly in the last hour of trade to close at 71.29, up 24 paise over its previous close.

The rupee's rise was also supported by weaker dollar against key global currencies.

The dollar index, which gauges the greenback's strength against a basket of six currencies, was down 0.16 per cent at 97.49.

"Indian rupee gains in line with other Asian peers. Rupee edged higher after Reserve Bank of India left the policy rate at 5.15, the first pause after five consecutive rate cuts, amid rising inflation expectations," HDFC Securities said.

The 10-year government bond yield was at 6.60 per cent, up over 2 per cent.

"India's sovereign bonds declined the most in more than two months, the benchmark 10-year bond yield bonds rose 13 basis points to 6.60 per cent, after central bank keeps policy rate unchanged... The MPC also decided to continue with the accommodative stance as long as it is necessary to revive growth," it added.

On the equity front, the BSE gauge Sensex settled lower by 70.70 points or 0.17 per cent at 40,779.59. The index swung between losses and gains after the central bank kept the rates unchanged.

The NSE Nifty closed the day with a loss of 24.80 points or 0.21 per cent at 12,018.40.

Crude oil benchmark, Brent Futures, rose 0.65 per cent to USD 63.41 a barrel.

The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 71.78 and for rupee/euro at 79.50. The reference rate for rupee/British pound was fixed at 93.2719 and for rupee/100 Japanese yen at 66.11.

After five consecutive cuts in interest rates this year, the six-member Monetary Policy Committee (MPC), headed by RBI Governor Shaktikanta Das, unanimously voted to hold the key repo rate at 5.15 per cent and reverse repo rate at 4.90 per cent.

Bankers and economists had widely expected the central bank to cut rates for the sixth time to support a slowing economy, whose growth rate slipped to a six-year low of 4.5 per cent in the September quarter from 7 per cent a year back. MKJ Indian rupee opened on a steady note at 71.53 against the US dollar in early trade on Thursday ahead of the Reserve Bank of India's monetary policy decision.

Foreign institutional investors (FIIs) remained net sellers in the capital market, pulling out Rs 781.06 crore on Wednesday, according to provisional exchange data. MKJ MKJ