Indian Rupee Weaker After Central Bank Cuts Interest Rates

The Indian rupee was down a little against the US dollar following yesterday’s decision of India’s central bank to reduce interest rates in order to support economic growth.
The Reserve Bank of India cut its interest rates yesterday, including the Bank Rate, which has been reduced by a quarter of percentage point to 8.25 percent. Bank’s Governor Raghuram Rajan said in the statement:

With still weak investment and the need to reduce supply constraints over the medium term to stay on the proposed disinflationary path (to 4 per cent in early 2018), however, a more appropriate stance is to front-load a rate cut today and then wait for data that clarify uncertainty.

There have been talks that high borrowing costs constrain investment and consumer demand, and it looks like policy makers decided to listen to such complaints.
India’s gross domestic product grew 7.5 percent, making it the world’s fastest growing major economy, taking the first place from China. Analysts are cautiously optimistic about future developments in the Indian economy.
USD/INR advanced 0.19 percent to $63.825 as of 1:34 GMT today.

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