Published: Fri, October 05, 2018
Finance | By Jaime Brady

Rupee plunges to fresh record low of 73.77 against dollar

Rupee plunges to fresh record low of 73.77 against dollar

Indian equities fell about 1.6 per cent. Traders said the Reserve Bank of India likely intervened to curb the rupee's fall.

Reverse repo rate - the rate at which the RBI borrows money from commercial banks - too has been kept the same as the current rate of 6.25 per cent. The monetary policy stance has changed from neutral to "calibrated tightening". Five of the six panel members voted to leave the rate unchanged.

RBI in its monetary meet has left the repo rate unchanged.

Adding to the bullish mood, Federal Reserve chairman Jerome Powell said on Wednesday that the central bank may raise interest rates above an estimated "neutral" setting as the "remarkably positive" U.S. economy continues to grow.

The benchmark 10-year bond yield hit 8.2 per cent in early trade against the previous close of 8.11 per cent.

The greenback rose about 0.3 per cent against a basket of currencies after news that United States service sector activity raced to a 21-year high in September.

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The Indian rupee is the worst performing Asian currency this year, having lost more than 13 per cent. During April-June India's balance of payments slipped into deficit for the first time in six quarters.

"The biggest policy anchor for rupee is high real rates. It is, therefore, imperative to further strengthen domestic macroeconomic fundamentals".

Mr Gandhi took aim at Prime Minister Narendra Modi yesterday, accusing him of remaining silent over the rupee crisis.

Taking a more gradual approach to raising rates should make it easier to sustain economic growth, with the RBI forecasting expansion of 7.4 percent for the financial year ending in March and 7.6 percent for the following year.

A labourer carries an iron pipe at the construction site of a residential complex on the outskirts of Kolkata, October 5, 2018.

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