Rupee skids for fifth day, drops 8 paise to 70.89 against dollar after RBI cuts key interest rate and lowers growth forecast

Mumbai: The rupee dropped 8 paise to finish at 70.89 against the US dollar on Wednesday after the RBI cut the key interest rate and lowered the growth estimate for the current fiscal. This is the fifth straight session of loss for the domestic currency, during which it has lost a hefty 210 paise. During the day, the local currency witnessed high volatility following the announcement of RBI Monetary Policy Committee (MPC) decision. At the interbank foreign exchange market, the rupee opened weak at 70.92. It shuttled between a high of 70.62 and a low of 70.99, before finally closing at 70.89, down 8 paise over its previous close. The local unit had settled at 70.81 against the US dollar on Tuesday. [caption id=“attachment_5114261” align=“alignleft” width=“380”] Representational image. Reuters.[/caption] The Reserve Bank of India (RBI) on Wednesday cut interest rate by a rare 35 basis points – the fourth successive reduction – to a nine-year low, in an attempt to boost an economy growing at its slowest pace in nearly five years. The six-member monetary policy committee (MPC) maintained the ‘accommodative stance’ on the monetary policy. The RBI also revised real GDP growth forecast for 2019-20 downwards to 6.9 percent from 7 percent estimated in the June policy. Forex traders said the US-China trade concerns weighed on the investor community and kept pressure on the Indian rupee, while easing crude oil prices capped the losses to some extent. Brent crude futures, the global oil benchmark, slipped 0.49 percent to $58.65 per barrel as the trade tensions between the world’s top two economies exacerbated fears of a global slowdown. China has reported to have said that it is halting new purchases of US agricultural products after President Donald Trump vowed last week to impose new tariffs on Chinese goods starting in September. Meanwhile, foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 2,107.93 crore on Tuesday, as per provisional data. The 10-year government bond yield was at 6.37 percent on Wednesday. The dollar index, which gauges the greenback’s strength against a basket of six currencies, inched up 0.01 percent to 97.64. On the domestic market front, after swinging 494 points in a highly volatile session, the 30-share BSE Sensex settled 286.35 points or 0.77 percent lower at 36,690.50. The Financial Benchmark India Private Ltd (FBIL) set the reference rate for the rupee/dollar at 70.7226 and for rupee/euro at 79.2494. The reference rate for rupee/British pound was fixed at 85.9944 and for rupee/100 Japanese yen at 66.41.