RBI holds key lending rates; repo rate stays at 6.5%

RBI holds key lending rates; repo rate stays at 6.5%”

In a volatile trade at the inter-bank forex market on Wednesday, the rupee opened below the 73-mark at 73.26 against the dollar as it moved in sync with oil prices which at one time breached the $85-per-dollar mark and settled a tad lower at $84.86 per barrel.

The rupee crashed below the 74-level against the United States dollar for the first time ever after the Reserve Bank kept its key policy rate unchanged. Indonesia's central bank governor stressed the need to raise interest rates before the Fed to avoid "drastic" capital outflows in the wake of a heavily flagged Fed hike in December.

The market did not react well to the RBI's decision. The MPC also kept the reverse repo rate the same at 6.25%.

After the Reserve Bank of India (RBI) in its fourth bi-monthly policy this fiscal left the policy rates unchanged and ruled out a rate cut in the rest of the fiscal, the rupee plummeted to 74.13 against the dollar, after opening higher then its previous close at 73.52. Turbulence in global stock and commodity markets and one-way shifts in currency flows in the wake of reversal of quantitative easing increasingly put pressure on the rupee. What happens in the future is important because the RBI's decision on whether or not to hike rates is driven more by expectations of future inflation rather than present levels.

"We rule out a hike of 50 basis points, as it may spook the market".

"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 Khoon Goh, head of Asia research at ANZ. So, will we see them reversing the latest hike - or, will we see something akin to the RBI announcing a hike in rates?

But the central bank said that global commodity prices other than oil have moderated, which should mitigate the adverse influence on input cost. "With the U.S. yield inching up to 3.25 percent, it was expected the RBI would increase the rates to protect against the inflation rise".

The Reserve Bank of India (RBI) lowered its retail inflation projection for the second half of the financial year 2018-19 to 3.9-4.5 per cent.

Rising US interest rates and bond yields have encouraged investors to pull out funds from emerging markets to pocket better returns, analysts said.

So while inflation in India is rising it's being driven by external factors, rather than strength in the underlying economy. "If crude prices continue to surge, then the RBI may have to come with front-loaded rate increases".

Like this



07 October 2018
Yankees rout A's; will play Red Sox
Hendriks was designated for assignment in June and cleared waivers, but now he'll open the A's first postseason game since 2014. Unfortunately, Oakland's bats went quiet at the wrong time , producing just two hits through the first seven scoreless innings.

07 October 2018
Microsoft pulls Windows 10 October 2018 update as users files went missing
That's great right up until Microsoft releases an update that causes problems for the end user. The company kicked off the update's rollout earlier this week at its NY event.

07 October 2018
Windies totter after Kohli, Jadeja hundreds
The tourists were dismissed for 196 early in the final session while following on, to trail the two-match series 1-0. However, Kuldeep improved on his first innings figures, where he conceded 62 runs in his 10 overs for one wicket.

07 October 2018
Lewis Hamilton roars to Japanese GP pole, horror run for Vettel
It's a very mixed-up starting grid, but the sight of Romain Grosjean's Haas leading the third row is an intriguing one. Vettel dived for the inside, Verstappen half defended but left space. "They don't make tracks like this anymore".

07 October 2018
Netflix consumes 15% of the world’s global internet traffic
In total, streaming video accounts for more than half the bandwidth on the internet worldwide at 58% of total bandwidth. In the U.S., Amazon Prime Video has now outperformed YouTube in information utilization (7.7% versus 7.5%).

07 October 2018
Turkish Police Believe Saudi Journalist Was Killed at Consulate
Consul General of Saudi Arabia Mohammad al-Otaibi gives a tour of Saudi Arabia's consulate in Istanbul , Turkey , October 6, 2018. Turkish prosecutors are probing the link between their visit and Khashoggi's disappearance, he said.

07 October 2018
Jose Mourinho's job not under immediate threat: Man United sources
Manchester United have dismissed reports Jose Mourinho will be sacked as the club's manager this weekend as "nonsense". It had me expecting that the Red Devils would win 5-0 and Mourinho would be living it large in his smug way post match.

07 October 2018
Armed Forces ready to help out in quake and tsunami hit Palu
Underlining a growing sense of urgency, President Joko Widodo was due to make his second visit to the disaster zone on Wednesday. United Nations deputy spokesman Farhan Haq said Tuesday that United Nations and relief agencies are on the ground or en route.

07 October 2018
Trump boards plane to Topeka, anticipates Senate win for Kavanaugh
Over 2,400 law professors have signed a petition urging the Senate not to vote Kavanaugh into the Supreme Court , as of Thursday. Vice-President Mike Pence planned to be available Saturday in case his tie-breaking vote was needed, which now seems unlikely.

07 October 2018
Tom Brady can break yet another National Football League record Thursday night
As a matter of fact, Vrabel caught eight scoring passes during his time in New England (2001-08). That would be an National Football League record.