Rupee hits 74 level to the dollar as RBI-govt spat worsens

The Indian currency hit the 74 level against the dollar in trade today amid worsening of the ongoing RBI-govt spat which is seen as a threat to the central bank's autonomy. The currency opened 23 paise lower at 73.90 per dollar compared to yesterday's close of 73.67 level to the dollar. But hit the 74 level within half hour of trade, down 0.44% from its previous close.

The rupee has fallen 13.62% since the beginning of this year.

In his strongest criticism of RBI yet, Finance Minister Arun Jaitley on Tuesday hit out at the central bank for failing to check indiscriminate lending during 2008 and 2014 that has led to the present bad loan or NPA crisis in the banking industry.

The remarks by Jaitley came amid reports of mounting tension between the finance ministry and RBI after the central bank's Deputy Governor Viral V Acharya in a speech on Friday warned that undermining autonomy and independence of RBI could be "potentially catastrophic".

This was seen as a veiled reference to RBI pushing back hard against the government pressure to relax its policies and reduce its powers.

"You see (between) 2008 to 2014, after the global economic crisis, to keep the economy artificially going, banks were told open your doors and lend indiscriminately," Jaitley said at India Leadership Summit organized by US-India Strategic Partnership Forum.

"The central bank looked the other way, there was indiscriminate lending," he said. "I am surprised that at that time the government looked the other way, the banks looked the other way. I don't know what the central bank was doing (because) it was the regulator of these. They kept pushing the truth under the carpet."

Meanwhile, on a net basis, foreign portfolio investors (FPIs) sold shares worth Rs 1,592.02 crore on Tuesday, while domestic institutional investors (DIIs) bought shares worth Rs 1363.04 crore, as per provisional data.

Meanwhile, the Sensex was trading 10 points lower at 33,880 and Nifty too was down 9 points to 10,1888 level.