RBI keeps rates steady; markets, rupee gain

Reserve Bank of India (RBI) kept its key policy rate unchanged on Wednesday, adopting a wait-and-watch stance as policymakers assessed the fallout from the six-week Iran conflict on energy supplies, inflation and growth.

The BSE Sensex, meanwhile, jumped 2,946 points to close at 77,562.90 on Wednesday, its best single-day gain in five years after a conditional ceasefire was announced in West Asia announced a two-week ceasefire. The index hit an intra-day high of 77,635.54. As a result of the massive recovery, investors’ wealth swelled by INR 16.25 lakh crore.

Simultaneously, the rupee too gained for the fourth consecutive session on Wednesday and ended at 92.58 per U.S. dollar, up 0.5 per cent from its close of 93.0075 on Tuesday.

The currency opened stronger at 92.64 and briefly moved above 92.50 during the session. The currency has gained 2.4 per cent so far in April.

RBI said “excessive speculation” on the rupee prompted surprise actions on the currency front in the last fortnight, but clarified that its measures will not remain forever.

Deputy Governor T Rabi Sankar said there was an “artificial drying up” of supply in the market during those days, which led to the measures.

RBI’s six-member Monetary Policy Committee voted unanimously to keep the benchmark repurchase rate at 5.25 per cent, flagging heightened uncertainty after the West Asia conflict drove crude prices sharply higher, weakened the rupee and disrupted trade flows. Brent crude, the global oil benchmark, tumbled 15 per cent to $92.88 per barrel.

Rising for the fifth day in a row, the 30-share BSE Sensex jumped 2,946.32 points or 3.95 per cent to settle at 77,562.90, registering its best trading day in five years. Duringthe day, it surged 3,018.96 points or 4 per cent to 77,635.54.

Thanks to the sharp rally in equities, the market capitalisation of BSE-listed companies surged by INR 16,25,093.09 crore to INR 4,45,51,401.85 crores (equivalent to $4.81 trillion).

Thanks to the sharp rally in equities, the market capitalisation of BSE-listed companies surged by INR 16,25,093.09 crore to INR 4,45,51,401.85 crores ($4.81 trillion).

In Asian markets, South Korea’s benchmark Kospi surged 6.87 per cent and Japan’s Nikkei 225 index jumped 5.39 per cent. Shanghai’s SSE Composite index and Hong Kong’s Hang Seng index also recorded sharp rallies, while the European markets were trading significantly higher.