Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

Free Trading Guides
Subscribe
Please try again
Select

Live Webinar Events

0

Economic Calendar Events

0

Notify me about

Live Webinar Events
Economic Calendar Events

H

High

M

Medium

L

Low
More View More
Rupee Strengthens as India Leaves Interest Rates Unchanged

Rupee Strengthens as India Leaves Interest Rates Unchanged

Talking Points

- USD/INR weakens after India’s central bank leaves interest rates on hold rather than lowering them as many forecasters had predicted.

- The Rupee is now at its highest against the US Dollar since November last year.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for the week on the DailyFX Webinar Calendar.

USD/INR weakened Wednesday to its lowest since November 10 last year after a largely unexpected decision by the Reserve Bank of India to leave its benchmark interest rates where they were. In a Reuters poll, 30 of 46 forecasters questioned had predicted that rates would be lowered.

Chart: USDINR Daily Timeframe (November 2016 to February 2017)

The unanimous RBI decision to keep its repo rate at 6.25% inevitably raises speculation that the next move in Indian interest rates could be up rather than down, lifting the yield on the 10-year Indian government bond to 6.75%, its highest since November 8. While the RBI has been cutting rates, it’s possible that it might now decide to reverse course to combat rising inflation at a time when the “demonetization” of the economy has had less impact on it than some had expected.

Indian Prime Minister Narendra Modi announced on November 8 last year that 500 and 1,000 Rupee notes would no longer be legal tender in a decision he described as a move against corruption.

--- Written by Martin Essex, Analyst and Editor

To contact Martin, email him at martin.essex@ig.com

Don't trade FX but want to learn more? Read the DailyFX Trading Guides.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES