Indian Rupee: RBI holds but defends INR – BNY

Bob Savage at BNY notes that the Reserve Bank of India kept the repo rate at 5.25% and a neutral stance, while unveiling measures to support the Rupee and attract foreign capital. Authorities raised inflation and cut growth forecasts, and see potential USD 40–60 billion in inflows from tax exemptions and incentives for foreign bond investors and non‑resident Dollar deposits.

Policy steady with FX‑support tilt

"India’s central bank kept the policy repo rate unchanged at 5.25% and retained its neutral policy stance, citing heightened uncertainty from the Iran conflict and a deteriorating global environment."

"Alongside the decision, the government and RBI unveiled measures to support the rupee and attract foreign capital, including removing capital gains and interest taxes for foreign investors in government bonds, improving incentives for non-resident dollar deposits, and offering concessional foreign exchange swaps for overseas borrowing."

"Policymakers raised their inflation forecast for the current fiscal year to 5.1% from 4.6% and cut GDP growth expectations to 6.6% from 6.9%, reflecting higher oil prices and weaker external conditions."

"Authorities estimate the new measures could attract USD 40bn to 60bn in inflows and help offset pressure from capital outflows and a weaker currency."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)