CB devalues rupee to Rs.230 against USD

The Central Bank in a late night policy announcement today devalued the rupee to Rs.230 against the US dollar despite the Central Bank Governor Ajith Nivard Cabraal three days ago saying that the prevailing exchange rate was appropriate.

“In that context greater flexibility in the exchange rate will be allowed to the markets with immediate effect. The Central Bank is also of the view that forex transactions would take place at levels which are not more than Rs. 230 per US dollar,” a brief Central Bank statement said.

It also hinted that more flexibility in the exchange rate was allowed to complement the eight-point policy package the Central Bank presented to the government last Friday to resolve the ongoing forex crisis.

The monetary authority also raised policy interest rates by 100 basis points on Friday to arrest soaring inflation and address the foreign exchange crisis.

Although the Central Bank maintained the official exchange rate at Rs.200-203 levels the dollar has been selling at Rs.250 levels in the unofficial market.