Rupee recovers from 5-week lows

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Mumbai – The rupee recovered from a five-week low hit on Tuesday to end the session with mild gains on the back of a falling dollar, but the outlook for the local currency remains weak after the RBI kept interest rates unchanged.

The disappointment over the Reserve Bank of India (RBI) decision to keep the repo rate on hold at 8 percent was compounded after the central bank signalled no further policy easing would take place until the January-March quarter of next year.

The RBI’s decision comes despite increased political pressure from the government, which last month unveiled a slew of fiscal and economic reforms, while Finance Minister P. Chidambaram on Monday pledged to contain the fiscal deficit.

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