Rupee gives up its gains as policy seen hawkish
The rupee which had risen to 67.77 per dollar, fell to the days low of 67.9750 after the policy as delaers read the RBI statement as being more hawkish.
By Joel Rebello, ET Bureau | Updated:
MUMBAI: The rupee gave up its early gains against the US dollar as dealers sold the Indian currency following the Reserve Bank of India (RBI)'s monetary review on expectations that the chances of further rate cuts are limited.
RBI did not cut rates and said that inflation would most likely remain around the RBI target of 5% by March but also warned on a possibility of rising prices in the short term because of the salary increases of government employees after the seventh pay commission and vagaries in monsoon.
"The implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years. The Reserve Bank will adjust the forecast path as and when more clarity emerges on the timing of implementation," RBI said.
It also pointed to the vagaries in the distribution of the monsoon and the impact of adverse geo-political events on commodity prices and financial markets add additional uncertainty to the baseline.
The rupee which had risen to 67.77 per dollar, fell to the days low of 67.9750 after the policy as delaers read the RBI statement as being more hawkish.
RBI did not cut rates and said that inflation would most likely remain around the RBI target of 5% by March but also warned on a possibility of rising prices in the short term because of the salary increases of government employees after the seventh pay commission and vagaries in monsoon.
"The implementation of the VII Central Pay Commission award, which has not been factored into these projections, will impart upward momentum to this trajectory for a period of one to two years. The Reserve Bank will adjust the forecast path as and when more clarity emerges on the timing of implementation," RBI said.
It also pointed to the vagaries in the distribution of the monsoon and the impact of adverse geo-political events on commodity prices and financial markets add additional uncertainty to the baseline.
The rupee which had risen to 67.77 per dollar, fell to the days low of 67.9750 after the policy as delaers read the RBI statement as being more hawkish.
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