| Date: |
03-05-2013 |
| Subject: |
Indian rupee falls past 54 ahead of RBI policy |
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Mumbai: The Indian rupee fell past the psychological 54-mark and bond yields rose on Friday ahead of the annual policy announcement by the Reserve Bank of India (RBI) indicating less optimism in the financial markets about any significant rate easing by the central bank.
Stock markets also fell, with India’s benchmark BSE Sensex dropping 0.4% to 19,659.46 at 9:33am, while the 50-share Nifty down 0.33% to 5,970.50 points.
The rupee, which opened the session at 53.88 per dollar, soon dropped to breach the 54-mark within a few minutes and was later trading at 54.03, down 0.4% from its previous close.
The Indian currency touched its all-time low of 57.15 against the dollar on 22 June but has gained 1.89% from the start of this year.
The yield on 10-year benchmark bond rose to 7.78% from its previous close of 7.73%. Bond prices and yield move in opposite directions.
RBI will announce its annual policy for fiscal year 2014 at 11am and is widely expected to cut the repo rate (the key lending rate at which RBI lends short-term funds to banks), by 25 basis points. One basis point is one-hundredth of a percentage point.
The repo rate currently stands at 7.5%.
After hiking its key rates thirteen times between March 2010 and October 2012 to fight inflation, RBI began reversing its monetary policy stance in April 2012 by cutting repo rate by a more-than-expected 50 bps and followed it with two more rate cuts in January and March by 25 bps each.
Source: livemint.com
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