India’s rupee hits new low as RBI holds rates
India’s rupee breached 74 to the dollar for the first time ever yesterday as the country’s central bank surprised analysts by holding interest rates. The RBI said the benchmark repo rate -- the level at which it lends to commercial banks -- would remain at 6.50 per cent.
Forty out of 49 economists surveyed by Bloomberg News had predicted a rise of 25 basis points. The hold followed two consecutive rate increases and came as the rupee touched a new record low of 74.10 against the greenback Friday. The rupee has tanked 14pc against the dollar this year as investors withdraw from emerging markets.
The RBI raised rates in June and August in part to help shore up the currency, which started 2018 at 63.67 to the dollar. India’s economy grew at 8.2pc in the first quarter of the 2018-19 financial year due to a boost in manufacturing and consumer demand, following a downturn blamed on a shock cash ban in 2016.
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