Rupee Rises 8 Paise vs US Dollar: RBI Keeps Rates Steady

Mumbai, Apr 5 (PTI) The rupee appreciated 8 paise to close at 83.31 against the US dollar as the Reserve Bank of India on Friday kept the benchmark interest rate unchanged at 6.5 per cent for the seventh time in a row.

However, a strong US dollar against major rivals overseas and elevated crude oil prices capped sharp gains for the local unit, forex traders said.

At the interbank foreign exchange market, the local unit opened at 83.44 against the greenback. The unit hit an intra-day high of 83.26 and a low of 83.45.

The local unit finally settled at 83.31 against the dollar, 8 paise higher from its previous close.

On Thursday, the rupee recovered 14 paise to close at 83.39 against the US dollar.

The rupee gained as the RBI's monetary policy remained the focus. The central bank kept CPI and GDP projections for FY25 unchanged at 4.5 per cent and 7 per cent, respectively, said Anuj Choudhary Research Analyst, Sharekhan by BNP Paribas.

"After a detailed assessment of the evolving macroeconomic and financial developments and the outlook, it (MPC) decided by a 5 to 1 majority to keep the policy repo rate unchanged at 6.50 per cent," RBI Governor Shaktikanta Das said.

He further said that the six-member MPC would remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target while supporting growth.

While unveiling the first bi-monthly monetary policy for the current financial year, the RBI has retained its growth and inflation forecast for the current fiscal at 7 per cent and 4.5 per cent, respectively.

"We expect the rupee to trade with a slight negative bias on risk aversion in global markets and a strong US dollar. The surge in crude oil prices and FII outflows may also weigh on the rupee.

"Renewed geopolitical tensions in the Middle East may put downside pressure on risk assets. However, an optimistic economic outlook by the RBI Governor and any intervention by the central bank may support the rupee at lower levels," Choudhary added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading 0.12 per cent higher at 104.24.

Brent crude futures, the global oil benchmark, rose 0.09 per cent to USD 90.73 per barrel.

On the domestic equity market front, Sensex advanced 20.59 points, or 0.03 per cent, to close at 74,248.22. The Nifty rose 0.95 points to settle at 22,513.70.

Foreign Institutional Investors (FIIs) turned net buyers in the capital markets on Friday as they bought shares worth Rs 1,659.27 crore, according to exchange data.