Indian rupee retreats

The Indian rupee retreated from a four-month high hit earlier in the session on Monday after the central bank kept interest rates on hold, dashing some of the positive impact from the government's big bang reforms. The Reserve Bank of India disappointed investors by keeping its key repo rate on hold, choosing instead to inject more liquidity by lowering the banks' cash reserve ratio by 25 basis points.
"Overall there may be some disappointment after today's RBI announcement but I would still expect any USD/INR bounce to be sold into, particularly after the positive reforms announced around FDI and diesel prices etc," said Jonathan Cavenagh, currency strategist at Westpac Banking Corp. At 1.25 pm local time, the rupee was at 54.03/04 per dollar, weakening sharply from a session high of 53.66 hit earlier in the session that had marked its strongest level since May 15.