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Below is currency commentary by Mr. Gaurang Somaiya, Forex & Bullion Analyst, Motilal Oswal Financial Services.

“In his surprise announcement, the RBI governor raised policy repo rate by 40 bps with immediate effect and also announced to hike CRR by 50bps. CRR hike would be effective from 21st May and would withdraw Rs.87,000 crore from the system. The governor said that interest rate hike aimed at strengthening, consolidating medium-term economic growth prospects. Overall commentary of the RBI governor was hawkish and that restricted losses for the rupee. But ahead of the important Fed policy statement we suggest that one must be cautious. Volatility for the USDINR will continue to remain elevated and we expect it to quote in the range of 76.05 and 76.80.”

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