The rupee closed lower at 54.37 against the dollar after the Reserve Bank of India signalled that the "headroom for further monetary easing remains quite limited.”
The Reserve Bank of India cut its key policy rate by 25 basis points, today, largely in line with market expectations. On the back of this expectation, the rupee had appreciated to 53.91 in early trades.
The Indian unit opened stronger at 54.04 against the dollar.
The economy has been saddled with low growth and high inflation. The industry lobbied hard for a rate cut saying that such a measure is necessary to spur investments.
The rupee had closed weaker at 54.17 on Monday.
Call rates, G-Sec
The interbank call money rates closed slightly lower at 7.65 per cent from previous close of 7.70 per cent.
The 8.15 per cent Government security, which matures in 2022, closed lower at Rs 101.58 from previous close of Rs 101.70. Yields ended lower at 7.90 per cent from previous close of 7.88 per cent.