Rupee plunges to fresh record low of 73.77 against dollar

Rupee plunges to fresh record low of 73.77 against dollar

While no changes have been made to the repo rate, the bank has changed its stance from "Neutral" to "Calibrated Tightening".

The rupee was quoted 55 paise lower at 74.13 against the dollar soon after the RBI announced its monetary policy, reported PTI. Five of the six panel members voted to leave the rate unchanged.

"The RBI policy announcement of keeping rates unchanged is a surprise", said Abhimanyu Sofat, head of research, at brokerage firm IIFL Securities Ltd, adding that if crude prices continue to surge then RBI may have to may have to frontload rate hikes.

The central bank chose to hold the meeting when the country is facing the continuous threat of devaluation of the Indian rupee against the United States dollar, rising crude oil prices and liquidity issue.

She said: "For bond markets, a 25 bps hike accompanied by a hawkish stance could trigger the 10-year bond yield to rise to 8.25 percent". The rupee has depreciated almost 15 percent this year, becoming the worst-performing currency in Asia apart Indonesia and the Philippines.

The decline steepened in recent weeks as rising crude price - India imports two-thirds of its oil needs - and a sell-off by investors in emerging markets cranked up the pressure on the country's external balances. The risk to food inflation from spatially and temporally uneven rainfall is also mitigated, as confirmed by the first advance estimates that have placed production of major kharif crops for 2018-19 higher than last year's record.

Repo rate is the rate at which the RBI lends money to banks and is an important tool for RBI to control inflation.

Traders will also focus on US jobs data for September due later on Friday amid growing concerns about rising global yields and US-China trade tensions.

Mr Gandhi took aim at Prime Minister Narendra Modi yesterday, accusing him of remaining silent over the rupee crisis.

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