The Indian Rupee hit Rs. 74.13 per US Dollar for the first time, crossing a new low soon after Reserve Bank of India (RBI) announced that the repo rate (key lending rate) would remain unchanged at 6.5 per cent.
RBI Governor Urjit Patel said that the rupee fall is moderate in comparison to emerging markets peers even after the rupee breached the 74-mark against the US dollar for the first time ever, reported news agency Press Trust of India (PTI).
Five of the six panel members voted to leave the rate unchanged while experts had expected the central bank to hike the repo rate by 25 basis points or 0.25 per cent.
The reverse repo rate or the rate at which RBI borrows from commercial banks also remained unchanged at 6.25 per cent.
The bid of a rate hike had increased in the past month as oil prices climbed, the rupee’s slide accelerated and concerns on liquidity emerged.
The RBI had last raised interest rates in two successive policy reviews in August and June this year.
The RBI retained GDP growth estimate at 7.4 per cent for fiscal year ending in March 2019.
Earlier, the Finance Ministry said the fall in rupee was due to global factors and said there was no need for panic or knee-jerk reactions. He further said the RBI is doing whatever is necessary to deal with the situation, according to IFA Global report.
According to Motilal Oswal report said earlier, “Rupee fell to fresh record low levels primarily on back of surge in global crude oil prices and on expectation that higher crude oil prices will start hurting India’s import bill. Major Asian as well as emerging market currencies remains under pressure and that also is weighing on the rupee.”