Rupee gains 46 paise against US Dollar as RBI increases Repo Rate

Ahead of Reserve Bank of India's repo rate announcement, Indian Rupee on Friday gained 46 paise against US Dollar standing at Rs. 79.24.

The Monetary Policy Committee (MPC) of RBI on Friday increased repo rate by 50 basis points (bps) 5.40 per cent with immediate effect to tame inflation.

This was announced by RBI Governor Shaktikanta Das.

So far, it is the third hike by the central bank in repo rate in this fiscal year.

Earlier, RBI in the month of May raised the repo rate by 40bps and 50bps in May.

The Consumer Price Index (CPI) stood at 7.01 in June this year and since January it has continued to remain above comfort level of Central Bank of 6 per cent.

The RBI Governor in his address said MPC vote was unanimous and that the MPC to check inflation has decided remain focused on withdrawal of accommodative stance.

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He further announced the Standing Deposit Facility (SDF) rate adjusted to 5.15 per cent and Marginal Standing Facility (MSF) along with Bank Rate to 5.65 per cent.

Das said India has been struggling with high inflation adding the country is facing $13.3 billion capital outflow in the last few months.

He added inflation is expected to remain above 6 per cent. With the assumption of normal monsoon in 2022 and average crude oil price of US$ 105 per barrel, inflation projection is retained at 6.7 per cent in 2022-23, with Q2 at 7.1 per cent; Q3 at 6.4 per cent; and Q4 at 5.8 per cent, and risks evenly balanced.

The real GDP growth for the year 2022-23, he said, is retained at 7.2 per cent with Q1 at 16.2 per cent, Q2 at 6.2 per cent, Q3 at 4.1 per cent and Q4 at 4.0 per cent with risks broadly balanced.

He also cautioned about the ongoing war between Ukraine and Russia.

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