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The rupee rose 56 paise to close at 95.18 against the US dollar on Friday. The Reserve Bank of India announced several measures to attract foreign capital and increase forex liquidity.
The central bank kept the repo rate at 5.25% for the second straight review. The Monetary Policy Committee voted unanimously to hold the rate. The RBI maintained a neutral stance.
The rupee opened at 95.72 and hit an intraday high of 94.89. It had closed at 95.74 on Thursday.
Key policy moves include:
- Expansion of the Fully Accessible Route to new 15-, 30-, and 40-year government bonds
- Removal of foreign portfolio investor concentration limits
- Extension of FCNR(B) hedging support
- A PSU ECB swap window
- Restoration of the export realisation period to nine months
- Removal of taxes on foreign investment in government securities by the government
India's forex reserves stand at $682.3 billion. This covers about 11 months of imports.
The RBI cut its FY27 GDP growth forecast to 6.6% from 6.9%. It raised its CPI inflation projection to 5.1% from 4.6%.
The dollar index fell 0.19% to 99.22. Brent crude dropped 0.29% to $94.75 per barrel.
The Sensex fell 116.67 points to 74,243.34. The Nifty dropped 49.85 points to 23,366.70. Foreign institutional investors sold equities worth Rs 8,776.25 crore.
India's economy grew 7.8% in the January-March quarter. This compares with 8% in the previous quarter and 7% a year earlier.
Analysts at Kotak Securities expect the rupee to move toward 94 to 94.5 in the near term. Analysts at HDFC Securities noted this was the strongest single-day gain since April 2.