The majority of Forex traders expected that the Reserve Bank of India will lower the main interest rates today to pare with recent emergency cut by the Fed and the anticipated additional interest cut at tomorrow Fedâs meeting. But Yaga Venugopal Reddy, Governor of the Reserve Bank of India, decided to leave the key interest rates at the same level.
The main repurchase rate was kept at 7.75% â one of the highest rate level in near six years; two other key interest rates were also left unchanged.
Previous expectations of the rates cut led to the growth of the Indian stock market, which was almost eliminated after the rates decision has been announced.
It seems now that the central bank is more worried with the rising inflation that is growing on oil and food prices, than the possibility of the economy recession. And that can be justified especially if the economy is currently feeling quite well despite the global instability.
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