Rupee Rallies as RBI Cuts Rates Amid Economic Slowdown

The Indian rupee recovered 26 paise against the US dollar following a 25 basis points rate cut by the Reserve Bank of India. This move, overseen by new Governor Sanjay Malhotra, comes amid economic slowdown and aims to boost consumption. Traders expected this rate change, hence market reaction was minimal.

The Indian rupee staged a comeback, bouncing back 26 paise from its historic low to settle at 87.33 against the US dollar on Friday before trading at 87.45. This recovery coincided with the Reserve Bank of India’s (RBI) decision to lower the repo rate by 25 basis points.

Despite opening at 87.57 and reaching an intraday peak of 87.33, the currency stood at 87.45 against the greenback by midday at the interbank foreign exchange market. The Reserve Bank's anticipated rate cut did not significantly affect the market as it was widely expected.

This development is the first rate cut under the new RBI Governor, Sanjay Malhotra, in nearly five years. The decision followed Finance Minister Nirmala Sitharaman's budget announcement, which proposed significant tax reliefs aimed at invigorating the slowing economy.