Re gains 17 ps post RBI policy decision

New Delhi: The rupee gained 17 paise to close at 82.68 against the US dollar on Thursday after the Reserve Bank left its key interest rates unchanged. Forex traders said rupee appreciated tracking a weak tone in the US dollar. However, weak domestic markets and a surge in crude oil prices capped sharp gains. At the interbank foreign exchange market, the local unit opened at 82.81 against the US dollar and moved in a range of 82.68 to 82.86 in the day trade. The rupee finally settled 17 paise higher at 82.68 against the previous close of 82.85 on Wednesday. The Reserve Bank of India (RBI) on Thursday left its key interest rates unchanged for a third straight meeting but signaled tighter policy if food prices drive inflation higher. The hawkish stance was also reinforced by the unexpected announcement of reducing the cash in the banking system by raising the incremental cash reserve ratio (ICRR) to 10 per cent on the incremental NDTL (net demand and time liabilities) over the last 3 months. This will help in absorbing a large part of the excess liquidity created through the return of the Rs2,000 notes and the large dividend to the government from RBI. The move is expected to suck out about Rs 1 lakh crore from the banking system, he said, adding that this liquidity tightening measure will not impact credit needs of productive sectors.