MUMBAI, May 4: The rupee appreciated 8 paise to settle at 76.40 (provisional) against the US dollar on Wednesday following RBI’s surprise rate hike ahead of the US Federal Reserve’s policy decision.
At the interbank forex market, the domestic unit opened at 76.46 against the US dollar. It moved in the range of 76.17 to 76.58 during the session.
The rupee finally closed at 76.40, registering a rise of 8 paise over its previous close.
On Monday, the rupee had settled at 76.48 against the US dollar.
The forex market was closed on Tuesday on account of Id-Ul-Fitr.
The RBI on Wednesday after an unscheduled MPC meeting hiked the benchmark lending rate by 40 basis points (bps) to 4.40 per cent to contain inflation that has remained stubbornly above the target of 6 per cent for the last three months.
The Monetary Policy Committee (MPC) headed by RBI Governor Shaktikanta Das also raised the level of deposits banks are required to maintain as cash reserve by 50 bps to 4.5 per cent to suck out Rs 87,000 crore of liquidity from the banking system.
The CRR hike will be effective from May 21.
The governor said the interest rate hike is aimed at strengthening, consolidating medium-term economic growth prospects. Overall commentary of the RBI governor was hawkish and that restricted losses for the rupee, said Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.
“But ahead of the important Fed policy statement we suggest that one must be cautious. Volatility for the USD-INR will continue to remain elevated and we expect it to quote in the range of 76.05 and 76.80,” Somaiya said.
Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading 0.01 per cent lower at 103.45.
On the domestic equity market front, the 30-share BSE Sensex ended 1,306.96 points or 2.29 per cent lower at 55,669.03, while the broader NSE Nifty plunged 391.50 points or 2.29 per cent to 16,677.60.
Brent crude futures, the global oil benchmark, inched up 3.43 per cent to USD 108.57 per barrel.
Foreign institutional investors were net sellers in the capital market on Monday as they offloaded shares worth Rs 1,853.46 crore, as per stock exchange data. (AGENCIES)
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BIZ-STOCKS-CLOSE
Markets go into tailspin after RBI’s rate hike
surprise; Sensex, Nifty slump over 2 pc
Mumbai, May 4:
Equity markets fell sharply in late afternoon trade on Wednesday, with the Sensex and Nifty diving over 2 per cent each after the RBI in a surprise move hiked the benchmark lending rate to 4.40 per cent to contain inflation.
The 30-share BSE benchmark tumbled 1,306.96 points or 2.29 per cent to settle at 55,669.03. During the day, it plummeted 1,474.39 points or 2.58 per cent to 55,501.60.
The NSE Nifty tanked 391.50 points or 2.29 per cent to finish at 16,677.60.
The Reserve Bank of India (RBI) increased the benchmark lending rate by 40 basis points to 4.40 per cent in a bid to contain inflation, which has remained stubbornly above the target zone of 6 per cent for the last three months.
The decision follows an unscheduled meeting of the Monetary Policy Committee (MPC), with all six members unanimously voting for a rate hike while maintaining the accommodative stance.
“The MPC’s decision, in an unscheduled meeting, to raise the repo rate by 40 bps and CRR by 50 bps is a surprise since it came on the LIC IPO opening date. MPC’s proactive move is justified from the perspective of inflation management, but the timing leaves a lot to be desired.
“The above 1,000 point crash in Sensex has soured the sentiments on the opening day of India’s largest IPO,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
From the Sensex pack, Titan, Bajaj Finserv, Bajaj Finance, IndusInd Bank, HDFC Bank, RIL, Asian Paints, Maruti and Dr Reddy’s were the prominent losers.
In contrast, PowerGrid, NTPC and Kotak Mahindra Bank closed in the green.
Markets in Seoul and Hong Kong settled in the red. Bourses in Europe were also trading lower in the afternoon session.
Stock exchanges in the US surged in trade on Tuesday.
Meanwhile, international oil benchmark Brent crude jumped 3.12 per cent to USD 108.3 per barrel.
Foreign institutional investors offloaded shares worth Rs 1,853.46 crore on Monday, according to stock exchange data. (AGENCIES)
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