Rupee pares early gains post RBI rate cut

The rupee pared its early morning gains and was trading marginally down by 2 paise at 70.89 against the American currency after the Reserve Bank of India cut its repo rate by 0.25 percent on Friday. The rupee had opened on a strong note at 70.82 against the US dollar at the interbank forex market.

Following the RBI's Monetary Policy Committee (MPC) decision, the domestic currency was trading at 70.89 at 1238 hrs, down 2 paise over its last close. The rupee had settled at 70.87 against the US dollar on Thursday.

The Reserve Bank on Friday cut its benchmark lending rate by 0.25 percent to revive growth that has hit a six-year low of 5 percent, and affirmed commitment to remain accommodative to address growth concerns 'as long as necessary'. Forex traders said markets had discounted the rate cuts. Moreover, foreign fund outflows, heavy selling in domestic equities and rising crude oil prices also kept the pressure on the Indian rupee.

Meanwhile, Brent crude futures, the global oil benchmark, rose 0.17 percent to USD 57.81 per barrel. Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 810.72 crore on Thursday, as per provisional data.

Meanwhile, the 30-share index was trading 0.46 points, higher at 38,107.33, and the broader Nifty fell 10.10 points to 11,303.90.