Rupee Recovers, as RBI hikes Interest Rates

The Reserve Bank of India (RBI) has hiked the Marginal Standing Facility (MSF) rate and Bank Rate each by 200 basis points to 10.25 percent, to curb Rupee’s fall against the USD. As a result, the Rupee bounced back by 1% to trade at 59.13 vs US Dollar during the initial trading today.

The RBI has also limited the amount banks can borrow from overnight markets to Rs. 75,000 crore. That will boost the Rupee, as the banks cannot take speculative position in forward markets.

Recently, the Rupee had breached the mark of 61, putting more pressure on the Indian Economy and resulting in a fourth petrol price hike in six weeks.