USD/INR off record high as RBI lowers repo rate

The USD/INR currency pair edged lower on Friday, pulling back from a fresh record high, after the Reserve Bank of India (RBI) lowered interest rates for the first time since May 2020.

The RBI reduced its benchmark repo rate by 25 basis points to 6.25% at its February meeting, as largely expected. This way, borrowing costs were brought to their lowest level since January 2023.

The policy decision came amid a recent slowdown in GDP growth and global trade uncertainty. It also followed the government’s initiatives to lower personal tax rates in an attempt to stimulate spending and economic growth.

“The MPC while continuing with the neutral stance felt that a less restrictive monetary policy is appropriate at this current juncture,” RBI Governor Sanjay Malhotra said.

Meanwhile, the central bank now expects GDP growth for FY 2025-2026 of 6.7%, while its inflation forecast has been kept at 4.2%.

The USD/INR currency pair was last edging down 0.14% to trade at 87.4300.

The Rupee was still under pressure due to persistent portfolio outflows, while plunging to an all-time low of 87.5825 per dollar on Thursday.