Market Updates: After the Reserve Bank raised interest rates by 50 basis points on Friday, the Indian rupee strengthened by 17 pesos to end the day at 79.23.
The native currency's opening rate on the interbank foreign exchange market was 79.15 per dollar. It lingered between 78.94 and 79.29 during the session. The local currency eventually finished at 79.23, a 17-paise increase over its previous closing of 79.40.
The Reserve Bank increased the benchmark interest rate on Friday, the third consecutive increase since May, in an effort to lower the persistently high inflation rate and support the currency.
To return the interest rate to its pre-pandemic level, the repurchase rate was increased by 50 basis points. The last time it was 5.40 percent was in August 2019.
The dollar index, which gauges the strength of the dollar against a basket of six different currencies, was up 0.25 percent at 105.95 at the time.
Forex traders said that the local currency was strengthened by foreign funds entering the capital markets and by falling crude oil prices. The benchmark for world oil, Brent crude futures, increased 0.20 percent to USD94.31 a barrel.
Governor of the Reserve Bank of India (RBI), Shaktikanta Das, said that the RBI will continue to keep a close eye on the rupee and ensure its stability. "The strengthening of the U.S. dollar has more to do with the depreciation of the Indian rupee than it has with the country's macroeconomic fundamentals. The RBI's market interventions have contributed to reducing volatility and ensuring the smooth movement of the rupee", he added.
The BSE Sensex closed 89.13 points or 0.15 percent higher at 58,387.93 on the local equities market, while the larger NSE Nifty gained 15.50 points or 0.09 percent to 17,397.50.
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