RBI seen raising rates again as rupee slide accelerates

RBI seen raising rates again as rupee slide accelerates

RBI seen raising rates again as rupee slide accelerates

Meanwhile, the BSE benchmark Sensex dropped by 137.62 points, or 0.38 per cent, to 36,388.52 in opening trade Wednesday.

As per the RBI's fourth bi-monthly monetary policy statement, the key lending rates have been kept intact on the back of an uncertain global economic scenario.

"Despite a stronger dollar, crude oil prices continued to remain very elevated, which is putting further pressure on current-account deficit currencies that rely on oil imports, India and Indonesia specifically", said ANZ's Goh.

The Reserve Bank of India (RBI) is expected to raise rates for a third time since June on Friday to combat inflationary pressures as it grapples with a weakening rupee, surging oil prices and market instability sparked by a major non-bank finance firm's defaults.

Five of the six monetary policy committee (MPC) members voted to leave the rate unchanged.

The RBI said that made it vital "to further strengthen domestic macroeconomic fundamentals". "First, the government announced in September measures aimed at ensuring remunerative prices to farmers for their produce, although uncertainty continues about their exact impact on food prices".

China's financial markets are closed for the week.

With regard to rising crude oil prices, the central bank said oil prices and other input costs may drag down investment activity by denting profit margins of corporates. Despite a high-than-expected growth in the first quarter, RBI has retained its GDP growth projection for 2018-19 at 7.4%.

The Reserve Bank of India in its monetary policy meet in August made a decision to hike the key interest rates from 6.25 per cent to 6.50 per cent. This will definitely improve the confidence of the market and it will also improve the credit pick up in the festive season.

Forex reserves had touched a record of United States dollars 426.028 billion in the week to April 13, 2018, but have been declining since then on account of RBI intervention in market to stem fall in the rupee.

The rupee, one of the worst performing currencies, has inched closer to the 75 per dollar level. "Raising the repo rate will increase the real interest rates and help in attracting fresh foreign inflows which will help in containing the rupee".

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