Rupee gains 23 paise against USD after rate hike

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Mumbai, June 25 (UNI) The Rupee today gained 23 paise to close firm at 42.73/74 against the US Dollar on the key rate hike by the Central Bank.

The Indian Rupee opened stronger at 42.88/90 per dollar from its previous close of 42.96/97 per dollar and further strengthened on the expectaions that RBI's move to tame inflation will help the economy to sustain comfortable growth, dealers said.

The Rupee rose after the RBI raised key interest rates by 50 basis points to tame price pressures, prompting dollar sales by exporters on expectations of a stronger currency, a senior dealer with a leading private bank said.

The local unit today traded in a wide range band between 42.73 and 42.90 per dollar in a volatile interbank foreign exchange market and is expected to be near the 42.70 level as reportedly the Central bank was willing to hold Rupee stronger against the greenback.

After market hours late last evening, the apex bank raised its key lending rate by 50 basis points to 8.5 per cent with immediate effect, highest since March 2002 and the second hike this month.

It had also hiked cash reserve ratio (CRR), the proportion of deposits banks must keep with the Central bank, to 8.75 per cent from 8.25 per cent in two 25-basis-point stages on July 5 and July 19.

Meanwhile today, the Indian bourses bounced back into green, snapping the five-day straight decline.

RBI today fixed the reference rate for US Dollar on flat note at Rs 42.82 per unit, twelve paise down as compared to previous rate of Rs 42.94 per unit.

Meanwhile, the six-month and annualised premium was quoted higher at 4.54 (4.26) per cent and 3.96 (3.81) per cent, respectively.

However, Rupee ended the day firm at 66.51/52 (66.71/72) per unit against Euro. It closed at 84.10/12 (84.32/33) per unit against the Pound Sterling and ended at 39.50/52 (39.72/74) per hundred units against the Japanese Yen.

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