The Indian Rupee has weakened yet again against the US Dollar and has fallen against the majority of its most traded peers after the Reserve Bank of India decided o keep interest rates unchanged on Monday.
The decision by the Central Bank was expected by investors after it cut rates in each of its three previous policy meetings. The Bank warned of the upward risks of inflation due to the Rupee being one of the hardest hit currencies in the emerging markets sell-off.
Last week the Rupee tumbled to a record low of 59.98 against the US Dollar as investors worried about India’s record-high current account deficit and as they were not impressed at the Indian government’s attempts at boosting investment.
“The RBI was slightly hawkish but with the rupee under pressure to weaken, the tone was appropriate,” said Suresh Kumar Ramanathan, head of regional interest rates and FX strategy at CIMB in Kuala Lumpur.
India’s current account deficit hit 5.4% of GDP in the April-December period, exacerbating pressure on the rupee.
“As long the rupee is under pressure, RBI will hesitate to ease anytime soon,” Ramanathan said.
The Central Bank chose to maintain interest rates at 7.25% and kept the share of deposits that banks must keep with the Central Bank steady at 4%.
Still, economists said there remains room for moderate policy easing in coming months.
“What the RBI is looking at is not just a couple of months of improving inflation but something that is much more lasting,” said Rajeev Malik, senior economist at CLSA in Singapore, who expected a rate cut in the July policy review but none thereafter in the near term.
India is struggling to shake off its massive trade deficit, which widened from $17.8 billion to $20.1billion in May.
Current Rupee (INR) Exchange Rates
< Down > Up
The Pound Sterling/ Indian Rupee Exchange Rate is currently in the region of: 90.7527 >
The Euro/Indian Rupee Exchange Rate is currently in the region of: 77.0219>
The US Dollar/Indian Rupee Exchange Rate is currently in the region of: 57.7325 >
The New Zealand Dollar/Indian Rupee Exchange Rate is currently in the region of: 46.6938 >
The Canadian Dollar/Indian Rupee Exchange Rare is currently in the region of: 56.8298 >
(Correct as of 10:10 am GMT)
Comments are closed.