MUMBAI: The Indian rupee strengthened on Friday after struggling for most of the week as global markets were jolted by fears of a trade war and foreign portfolio outflows persisted, pushing the rupee to its lifetime low past the 87 handle.
The Reserve Bank of India cut its key interest rate for the first time in nearly five years and signalled a less restrictive policy approach, seeking to provide stimulus to a sluggish economy.
Expectations that the Indian central bank will cut rates had also weighed on the rupee earlier in the week.
On the day, the currency rose about 0.2% to end at 87.4250 against the US dollar. It declined by nearly 1% on the week though, its worst weekly performance since December 2022.
Asian currencies were mostly higher on Friday and the RBI likely intervened to support the rupee ahead of the policy decision.
The rate cut had a negligible impact on the rupee with the dollar-rupee pair “finding support from the Governor’s statement that the RBI FX intervention policy will continue to focus on smoothening excessive and disruptive volatility,” said Sameer Karyatt, executive director and head of trading at DBS Bank India.
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