Rupee Rallies After RBI's Bold Rate Cut

The Indian Rupee strengthened by 13 paise against the US dollar on Friday following a bold decision by the Reserve Bank of India (RBI) to slash the repo rate by 50 basis points, exceeding market expectations. The central bank's move is designed to bolster economic growth amidst challenging global conditions.

Forex traders observed that the RBI's monetary policy maintains a strategic focus on growth, as it seeks to boost liquidity through a 100 basis points reduction in the Cash Reserve Ratio over the year and an inflation target of 3.7% for FY26. As a result, the domestic currency saw increased volatility but ultimately gained ground.

The Monetary Policy Committee's decision was met with optimism as it lowered the benchmark policy rate to 5.5%, reinforcing economic expansion. Additionally, the one percent reduction in the Cash Reserve Ratio aims to unlock liquidity worth Rs 2.5 lakh crore for lending to productive sectors. Industry leaders praised the coordinated fiscal and monetary efforts driving India's growth trajectory.

(With inputs from agencies.)