RBI prioritizes inflation over rate hikes to aid rupee
The Reserve Bank of India is unlikely to raise interest rates to defend the rupee despite the currency hitting record lows. Officials remain focused on maintaining growth and managing inflation while considering alternative measures such as dollar deposit schemes for non-resident Indians.
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The Reserve Bank of India will prioritize inflation over interest rate hikes to defend the rupee, which fell 6% since late February. The rupee hit a record low of 96.96 per dollar following an energy-price shock. Investors face a policy disconnect as interest rate swap markets price in 40 basis points of tightening by August.
