The Indian rupee strengthened on Friday after struggling for most of the week as global markets were jolted by fears of a trade war and foreign portfolio outflows persisted, pushing the rupee to its lifetime low past the 87 handle.

India’s new central bank governor cut interest rates for the first time in almost five years on Friday to help spur a slowing economy as global risks intensify.

Today’s monetary policy reflects a steady state of thinking at RBI. Today’s rate cut continued the MPC pivot to the “neutral” stance in October and the CRR cut in December.

The Reserve Bank of India (RBI) reduced its key repo rate on Friday for the first time since May 2020, aiming to provide stimulus to the sluggish economy, which is projected to grow at its slowest pace in four years during the current fiscal year.

Bankers welcome RBI's 25 basis point rate cut, predicting it will boost growth and complement the budget's focus on consumption and capex.