The rupee closed lower at 53.92 against the dollar after the Reserve Bank of India just met market expectations with a 25 basis points cut in key policy rates.
It also breached the 54-level mark shortly after the announcement of the monetary policy statement.
The Indian unit opened lower at 53.95 (previous close: 53.82) against the dollar as the RBI, in its macroeconomic report released after market close on Thursday, struck a caution note on further interest rate cuts in the face of stubborn inflation.
According to analysts and some traders, markets had already factored in a 25 basis points cut. To that extent, the impact of the 25 basis point reduction in repo rate cut remains limited on the Indian unit.
Also, not many banks have expressed hope of an immediate transmission of the monetary policy benefits. High interest rates have hampered investment pick-up in Asia’s third largest economy.
Intraday, the rupee moved between a high and low of 53.88 and 54.06, respectively.
Call rates, G-Sec
Amid high liquidity in the system, the interbank call money rates closed sharply lower at 7.15 per cent from the previous close of 7.50 per cent.
The 8.15 per cent government security, which matures in 2022, closed lower at Rs 102.66 from the previous close of Rs 102.74. Yields inched up to to 7.74 per cent from the previous close of 7.72 per cent.