Today RBI announces Interest rate decision, unchanged in Repo rate and CRR. Rupee was depreciated by 10 paisa and made the day high at 61.97 before data release. Rupee appreciated by 10 paisa and reach 61.7750, after data release.
RBI view on decision,they are wakeful and high Inflation poses growth, financial stability risks. Its aim to stabilize inflation expectation and will act if inflation main factor Food and Fuel doesnt fall or expected Food Inflation may not soften. They are waiting for Tapering decision, risky data and the Reserve Bank may be perceived to be soft on inflation.
RBI Gov Rajan Comment after Interest rate decision that,Current Inflation is high, think December price will be in Downward Direction. RBI doing difficult balancing act and trying to calibrate policy to curb Inflation. India growth is below its potential level and Supply is under control. Government is targeting to achieve Fiscal deficit target. He is comfortable at India CAD current level and aim for CAD spread without distortions. RBI waiting for next inflation data, RBI is not soft on Inflation.
RBI Gov Rajan earlier had increase 50 basis points after taking charge from September. Currently, RBI is waiting for more important data like Vegetable price may stable in next Inflation data. Our market has already discounted by the Tapering event and reacted on this event. However, Rupee may get weak against Dollar if Tapering happen, but may not react badly.
People should watch Fed Meeting decision today and forecast there investment on the basis on Rupee reaction.