BOMBAY. Sept 8: The central Reserve Bank of India (RBI) cut key short-term interest rates by 50 to 100 basis points today in its third reduction this- week amid signs the rupee currency has become more stable after recovering from all-time lows last month, says Reuters.

Traders interpreted the central bank's repo rate cuts as an indication of its increasing confidence in the rupee's recent stability after sharp volatility drove it to a record low of 46.08 per dollar last month.

'Today’s cut has boosted sentiment substantially. Two successive cuts of one percentage point (on) each day shows that the RBI wants to go at a faster speed," said Ashish Vaidya, senior manager, money markets, at private sector HDFC Bank.

The RBI set a cut-off rate of 10.5Q per cent at Its three-day

repo auction, down from 11 per cent at a one-day repo auction on Thursday.

The auction was held as part of the central bank s daily liquidity support mechanism for the financial system.

At Its additional longer -duration repo, introduced In August to support the currency, the RBI cut the yield to 11 per cent on a five-day auction from Thursday's 12 per cent for a four-day auction.

Traders said sentiment was boosted but bond prices were little changed as the auctions had drained substantial liquidity from the system, with the RBI mopping up 70.85 billion rupees.

"Prices rose as soon as the repo rate cuts were announced before falling again as the market realised large funds had gone out," said a primary dealer in government securities.