The US dollar is higher against the Indian rupee on Friday.
The rupee fell but avoided fresh record lows after a much-awaited cut to interest rates in India.
The dollar has had one of its worst weeks on record if judged on the fall in the US dollar index, so there was some short covering going into the weekend.
USD/INR was higher by 68 pips (+0.78%) to 75.472 with a daily range of 74.36 to 75.52 as of 3pm GMT.
The currency pair opened Friday with a downside tilt, reaching 74.5 but quickly recovered to turn higher for the day.
Indian rupee dips after RBI cuts rates
The Monetary Policy Committee (MPC) of the Reserve Bank of India cut interest rates by 75 basis points to 4.4% in a surprise overnight decision made before the bank’s scheduled meeting meet week. Governor Das, in announcing the new monetary easing said “Make no mistake, it is a fight never seen before”
In addition to the benchmark rate cut, the RBP announced a series of other measures, including permitting bank to allow a three-month moratorium on equated monthly instalments (EMIs) still outstanding on March 31. It will ease the burden on millions of households who had loan repayments to make but where income has stopped dead because of the country-wide lockdown.
It has been a coordinated effort between the Modi government and the RBI. Yesterday the Prime Minister announced a host of new welfare measures to help backstop the Indian economy against the economic wounds it will undoubtedly suffer.
Overnight the ratings agency Moody’s Investors Service cut their 2020 growth estimates for India in half, from 5.3% to 2.5%.
US dollar rises but still set for worst week in years
It has seen a small recovery on Friday but against a basket of major currencies, the dollar is set for one of its worst week in years. When markets were selling off steeply, financial institutions simply didn’t have the dollars on hand to meet all the needs of their customers. New measures introduced last week by the Federal Reserve appear to have resolved the funding squeeze for now.
