The Indian rupee drifted higher against the U.S. dollar in morning deals on Friday, after the Reserve Bank of India reduced its key interest rates unexpectedly and unveiled measures to improve liquidity to mitigate the economic downturn caused by the spread of coronovirus.
The repo rate was cut by 75 basis points to 4.40 percent, with immediate effect, the bank said in a statement.
Accordingly, the marginal standing facility, or MSF rate and the Bank Rate were reduced to 4.65 percent from 5.40 percent.
Further, widening the liquidity adjustment facility corridor, the central bank trimmed the reverse repo rate by 90 basis points to 4.00 percent.
The bank reduced the cash reserve ratio by 100 basis points to 3.00 percent.
The MPC decided to continue with the accommodative stance as long as it is necessary to revive growth and mitigate the impact of coronavirus, or covid-19, on the economy.
The rupee moved up to 74.21 against the greenback, its biggest level since March 20. The pair had ended Thursday’s trading at 74.94. The next key resistance for the rupee is located around the 72.00 level.
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