The rupee skidded by 18 paise to finish at a fresh lifetime low of 73.76 against the US dollar on Friday after the RBI unexpectedly kept the policy rate unchanged.
The domestic unit crashed below the 74-mark for the first time ever in intra-day trade on persistent capital outflows and high crude oil prices.
Markets were caught off guard as the Reserve Bank maintained status quo on the benchmark interest rate. However, the central bank warned that rising oil prices and tightening of global financial conditions pose substantial risks to growth and inflation.It also changed its policy stance to ‘calibrated tightening’ from ‘neutral’.
A majority of the analysts and bankers were expecting the six-member Monetary Policy Committee (MPC) to raise interest rate by 0.25 per cent. “Rupee was caught off guard and weakened beyond 74, after RBI surprisedmarkets by keeping rates unchanged. Given the rising oil and trade tensions, traders will bet on exports going up, to curb further weakening in the currency,” said Anand James, Chief Market Strategist at Geojit Financial Services.
Meanwhile, the FBIL set the reference rate at 73.5809 for the US dollar and 84.6975 for the euro.