Rupee slips on RBI s dovish stance, loose policy
By IANS |
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Reserve Bank Of India. Image Source: IANS News
New Delhi, April 7 : The RBI s stance on maintaining an ultra-loose monetary policy, along with liquidity infusion amidst rising Covid cases, weakened Indian rupee by 1.5 per cent on Wednesday, its biggest intraday fall since August 2019.
Accordingly, the rupee closed at 74.55 to a US dollar after the Reserve Bank of India assured the markets of a stable and orderly evolution of the yield curve via a specific amount of open market purchases of government securities.
On Wednesday, Governor Shaktikanta Das said RBI will conduct G-SAP 1.0 to purchase Rs one lakh crore worth of government securities.
MUMBAI: After logging its biggest single-day fall in nearly two years on Wednesday, the Indian rupee is expected to depreciate further as Reserve Bank s plan to purchase Rs 1 lakh crore-worth government bonds in the current quarter spooked sentiments.
Analysts said that Wednesday s loss wherein the rupee tumbled 105 paise to end the day at 74.47 against the US dollar has turned the rupee into Asia s worst performing currency so far this month.
Going forward, the domestic currency is expected to lose further ground and depreciate, they opined.
Some analysts said Reserve Bank s plan to buy government bonds worth Rs 1 lakh crore from the secondary market during the three months ending June 2021 is considered as a quantitative easing. The purchase of bonds under the government securities acquisition programme or G-SAP could go up to Rs 3 lakh crore in the current fiscal.
The rupee pared its initial gains to close down by 12 paise at 73.42 against the US currency on Tuesday amid concerns that rising COVID-19 cases and subsequent lockdowns in some states may hurt the economic recovery. Investors were also cautious ahead of the RBI policy statement to be released on Wednesday. Besides, gains in crude prices and a stronger dollar overseas weighed on the rupee sentiment. Rupee continued to trade in a narrow range for the third successive session despite volatility in domestic equities. Market participants remain cautious ahead of the important RBI policy statement that will be released on Wednesday, Gaurang Somaiyaa, Forex & Bullion Analyst, Motilal Oswal Financial Services, said.
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