RBI shocks with rate rise
- In its first decision under new governor Raghuram Rajan, the Reserve Bank of India has surprisingly increased its benchmark lending rate to 7.5% from 7.25%, saying that "bringing down inflation to more tolerable levels" warranted increasing the LAF repo rate.
- Analysts had expected the RBI to leave the rate as it was.
- The central bank also started to reverse recent measures it took to calm volatility in the forex market, lowering the marginal standing facility rate by 75 bps to 9.5%.
- The RBI's actions rocks shares, with the Sensex -2.5% after being -0.2% prior to the decision. The rupee plunges briefly before stabilizing somewhat and the USD-INR is now +0.3% at 62.38 ( PR)
- ETFs - Stocks: INDY, EPI, PIN, INP, INDA, INXX, SCIF, SCIN, INDL, SMIN. Currency: ICN, INR
|
