The Indian rupee climbed today after India’s central bank left interest rates unchanged at yesterday’s meeting and pledged to shift the monetary policy towards growth.
The Reserve Bank of India left its Bank Rate (the main interest rate) at 9 percent yesterday. The bank talked about signs of stabilization of the global economy:
Since the Second Quarter Review (SQR) of October 2012, the global economy has shown some signs of stabilisation although the situation remains fragile. While activity is picking up in the US and the UK, near-term prospects in the euro area are still weak.
Domestically, the situation also looked slightly better:
On the domestic front, there are some incipient signs of pick-up though growth remains significantly below its recent trend.
In conclusion, the RBI said:
In view of inflation pressures ebbing, monetary policy has to increasingly shift focus and respond to the threats to growth from this point onwards.
All in all, the policy statement was favorable for the rupee, allowing today’s gains.
USD/INR fell from 54.8512 to 54.5575 and EUR/INR dropped from 72.6852 to 72.3968 as of 11:44 GMT today.
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