Mumbai, Jun 6 (PTI) The rupee pared initial losses and appreciated 13 paise in morning trade on Friday, after the Reserve Bank cut repo rate by a higher-than-expected 50 basis points to prop up growth.

Forex traders said the latest RBI monetary policy has an all-round focus, it maintained growth momentum, by cutting rates by 50 bps, liquidity infusion by cutting CRR by 100 bps over the year and targeting inflation at 3.7 per cent in FY26.

At the interbank foreign exchange, the domestic unit witnessed heavy volatility. It opened at 85.91, registering a fall of 12 paise over its previous close. But soon pared the losses and saw an early high of 85.66 against the greenback.

On Thursday, the rupee snapped its two-day losing streak and closed 8 paise higher at 85.79 against the US dollar.

The Monetary Policy Committee (MPC) on Friday cut the benchmark policy rate by 50 basis points to 5.5 per cent and said frontloading rate cuts would support economic growth.

The Reserve Bank retained GDP growth projections for the current fiscal at 6.5 per cent.

Moreover, the central bank decided to cut Cash Reserve Ratio (CRR) by a huge 1 per cent, which will unlock Rs 2.5 lakh crore liquidity to the banking system for lending to productive sectors of the economy.

"RBI monetary policy is 10/10, it has an all-round focus, maintaining growth momentum, by cutting rates by 50 bps, liquidity infusion by cutting CRR by 100 bps over the year and targeting inflation at 3.7 per cent.

"It is great to see both GOI fiscal policy and RBI monetary policy working in tandem to propel the Indian economy to a new growth trajectory. It augurs well for the industry and our country," said Sadaf Sayeed, CEO, Muthoot Microfin.

Meanwhile, the dollar index, which gauges the greenback’s strength against a basket of six currencies, was trading higher by 0.07 per cent at 98.81.

Brent crude, the global oil benchmark, fell 0.52 per cent to USD 65.00 per barrel in futures trade.

On the domestic equity market front, the 30-share benchmark index Sensex recovered the initial lost ground and was trading 747.11 points, or 0.92 per cent higher at 82,189.15, while the Nifty was quoted 244.70 points or 0.99 per cent up at 24,995.80.

Foreign institutional investors (FIIs) sold equities worth Rs 208.47 crore on a net basis on Thursday, according to exchange data. PTI DRR ANU ANU

Monetary policy rate cut spurs currency appreciation and liquidity expansion, supporting domestic growth and market stability. The central bank cut the policy rate by 50 basis points to 5.5 per cent and reduced the cash reserve ratio by one percentage point, signalling frontloaded easing and reaffirming an inflation target of 3.7 per cent while retaining a 6.5 per cent GDP projection; these measures aim to inject liquidity into the banking system for lending and to support growth, coinciding with short-term exchange-rate volatility and modest currency appreciation.