Rupee reacts to RBI monetary policy review; drops 25 paise

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Rupee reacts to RBI monetary policy review; drops 25 paise
A sharp sell off in equities following the RBI's decision to keep rates unchanged, also saw the rupee dropping by 25 paise to trade at 55.64 to the dollar, at 12.05 pm.

The RBI today left the repo rate and the cash reserve rate steady, as against an expectation of a cut in these key rates. The maintenance of a status quo, ensured that markets drop sharply and this affected the Indian rupee as well.

The rupee is expected to move in tandem with the equity markets. The currency has fallen dramatically this year and is one of the worst performing Asian currency.

Deteriorating economic fundamentals, including a sharp surge in the fiscal deficit and the current account deficit has seen the Indian rupee fall.

Meanwhile, the Sensex was trading 165 points lower at 16,785 points, down almost 1% at 12.10 pm IST.

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