The Indian rupee depreciated against the U.S. dollar in afternoon deals on Friday, after the Reserve Bank of India cut its key interest rates unexpectedly to mitigate the adverse impact of the pandemic on the economy.
The monetary policy committee of the Reserve Bank of India reduced the policy repo rate by 40 basis points to 4 percent from 4.40 percent. The reverse repo rate was cut by 40 basis points to 3.35 percent from 3.75 percent.
The bank reiterated that it will maintain its “accommodative” stance till growth picks up.
Although the lockdown may be lifted by end-May with some restrictions, economic activity even in Q2 may remain subdued due to social distancing measures and the temporary shortage of labour, it said.
The rupee weakened to a 4-day low of 75.49 against the greenback from Thursday’s closing value of 75.06. Next likely downside target for the rupee is seen around the 77 level.