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RBI Raises Rates, Rupee Stronger

July 16, 2013 at 12:24 by Vladimir Vyun

Many INR billsThe Indian rupee advanced today after the nation’s central bank raised interest rates yesterday in order to address the exchange rate volatility and to support the weakening currency.

The Reserve Bank of India increased its main interest rate from 8.25 percent to 10.25 percent yesterday. The bank explained the background for such decision and “the need to restore stability to the foreign exchange market”:

The market perception of likely tapering of US Quantitative Easing has triggered outflows of portfolio investment, particularly from the debt segment. Consequently, the Rupee has depreciated markedly in the last six weeks.

USD/INR fell 0.96 percent to 59.32 as of 12:23 GMT today.

If you have any questions, comments or opinions regarding the Indian Rupee, feel free to post them using the commentary form below.

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