Rupee Slips as RBI Rate Cut and Liquidity Measures Shape Market Dynamics

The Indian rupee dropped by 5 paise to 89.94 against the US dollar, following the RBI's decision to cut the benchmark interest rate and take steps to boost liquidity. Despite initial gains, the rupee depreciated after the policy announcement, highlighting the impact of RBI's monetary strategies on currency markets.

On Friday, the Indian rupee ended with a 5 paise drop, settling at 89.94 against the US dollar, after the Reserve Bank of India altered key financial policies.

The central bank slashed its benchmark interest rate for the first time in half a year. However, it also implemented significant liquidity measures, purchasing government bonds worth up to Rs 1 lakh crore and conducting a USD 5 billion buy-sell swap to stabilize the currency market.

Despite early morning gains, the rupee's value receded following RBI's monetary policy update, highlighting ongoing challenges in the currency market as RBI Governor Sanjay Malhotra emphasized the bank's focus on efficient market functioning and liquidity regulation without targeting specific rupee levels.

(With inputs from agencies.)