Wednesday, 17 October, 2018

RBI keeps repo rate, reverse repo rate unchanged

Business       by Sarfraz Ali | Published Business by Sarfraz Ali | Published
Laurie Berry | 07 October, 2018, 17:31

The rupee, which touched an all-time low of 73.41 against the dollar, may have pushed the central bank to turn hawkish.

The Reserve Bank of India (RBI) held interest rates unchanged on Friday, condemning the rupee to a record low and surprising analysts who had expected a rate rise to counter inflationary pressures arising from the weak currency and high oil prices.

A "neutral" stance allows the RBI to move either way on rates.

Retail inflation in August increased 3.69 per cent, slowing from 4.17 per cent in the previous month. And the decision it makes "will highlight the RBI's bias to the market in terms of it objective and mandate". This comes after MPC raised the benchmark repo rate twice this year, taking it from 6 percent to 6.5 percent.

The Reserve Bank of India's (RBI) pause after two hikes since June is in contrast to its peers in Indonesia and the Philippines, who have pressed ahead with aggressive policy action to counter an emerging-market selloff triggered by higher United States rates and a stronger dollar.

All of this has resulted in currency depreciations in emerging economies, which is an understatement as far as the rupee is concerned. We won't be surprised by more than a 25 basis point hike, but still, we revise our end-year forecast for USD/INR to 75 from 73.5.

India On Course For a Victory vs Windies After Enforcing Follow-on
Even before stepping on the green pitch of Rajkot, the Men in Blue were heavily touted to thrash the travelling West Indies side. Powell resorted to aggression in an excellent counter-attacking knock, facing 93 balls and hammering eight fours and four sixes.

Against this backdrop, the RBI's Monetary Policy Committee will announce its latest policy decision on Friday and an interest-rate increase is likely.

Since the MPC's mandate is to target inflation, there is a possibility that we may be seeing another rate hike - the third in a row. So, they (RBI) may take a pre-emptive action.

"The key takeaway is that the MPC remains focused on inflation control". The rupee's performance is worst amongst the other Asian currencies amid the widening of current account deficit of India by a greater margin due to the surge in crude prices. Market was expecting at least 25 bps repo rate hike and measures to stabilise the rupee.

Unveiling the bi-monthly monetary policy, the central bank warned that volatile and rising oil prices and tightening of global financial conditions pose substantial risks to growth and inflation. Secondly, oil prices remain vulnerable to further upside pressures, especially if the response of oil-producing nations to supply disruptions from geopolitical tensions is not adequate.

So while inflation in India is rising it's being driven by external factors, rather than strength in the underlying economy. There was speculation that the RBI would increase the Repo rate to boost foreign investment inflows.

Recommended

Lewis Hamilton surprised by 'dream' run of races Lewis Hamilton surprised by 'dream' run of races Mercedes were the quickest in the first two practice sessions with Valtteri Bottas also recording better lap times than Vettel. Vettel ended up 0.833 seconds adrift of FP2 pacesetter Lewis Hamilton , and admitted that the tyre life was not flawless .

Teenager Shaw becomes India’s youngest debut century-maker Teenager Shaw becomes India’s youngest debut century-maker As Shaw went on a rampage against the Caribbean bowlers, Tendulkar took to Twitter to congratulate the debutant. To me, being talented is one thing but what you do with that talent becomes more important.

Red Sox, Yankees ready to rumble again in playoffs Red Sox, Yankees ready to rumble again in playoffs Boston went 10-9 against the Yankees this year and set a club record with 108 wins. Next stop for the Yankees: Fenway Park and the rival Red Sox .

Rafa describes Ashley dinner as 'pleasant' Rafa describes Ashley dinner as 'pleasant' Manchester United beat Benitez's side 3-2 yesterday thanks to a 90th-minute victor from substitute Alexis Sanchez . Last year, we were in the bottom five teams in the table in December, and still we finished 10th.

Samsung Electronics Q3 operating profit jumps 20.4% to record W17.5tr Samsung Electronics Q3 operating profit jumps 20.4% to record W17.5tr Memory chips account for the biggest portion of Samsung's profit and buys the company time to shore up its smartphone sales. The earlier market consensus on Samsung Electronics' operating profit was between 16.8 trillion won and 17.1 trillion won.

U.S. first lady lands in Cairo as last stop in Africa trip U.S.  first lady lands in Cairo as last stop in Africa trip The controversial wardrobe choice was interpreted to mean that the First Lady was out of touch with African history. Melania Trump has said she tells her husband off when she disagrees with what he tweets .

PSN Name Changes Coming Soon to PS4, According to Some Developers PSN Name Changes Coming Soon to PS4, According to Some Developers New information suggests that Sony might finally allow PlayStation Network users to change their usernames. For context, Microsoft has allowed Xbox Live users to change their usernames for years.

British man dies after being bitten by sea snake in Australia British man dies after being bitten by sea snake in Australia They tend to be found in tropical and sub-tropical waters through south-east Asia, the western Pacific and northern Australia. According to research published past year , snakes were responsible for 27 deaths in Australia between 2000 and 2013.

Saudis murdered journalist in Istanbul consulate, says Turkey Saudis murdered journalist in Istanbul consulate, says Turkey He went to the Saudi consulate to obtain an official document for his upcoming marriage to his Turkish partner. Khashoggi left his home country past year and moved to Washington, D.C., where he lived in self-imposed exile.

Verstappen Mocks Vettel and Ferrari over Championship Claims Verstappen Mocks Vettel and Ferrari over Championship Claims He was then fourth after Verstappen ran off the road at the chicane, and in rejoining the track, bumped Raikkonen on to the grass. Japanese fans: Despite the disappointment for Honda's home fans, the large crowds at Suzuka remained enthusiastic throughout.

Potential Tropical Storm could make Wednesday landfall Potential Tropical Storm could make Wednesday landfall Regardless of name or not, this system will likely be in a good position to send some moisture our way later in the week. You can also watch all of our newscasts - and - if the need arises, we will live stream the news 'round the clock.

Unemployment Rate Falls To 49-Year Low Of 3.7 Percent Unemployment Rate Falls To 49-Year Low Of 3.7 Percent This comes despite USA president Donald Trump's tariffs on goods from countries including China and those of the European Union. The unemployment rate fell to 3.7 percent in September, its lowest level since 1969 , the Labor Department reported Friday.

Gary Neville fumes over Man United conduct regarding Mourinho leak Gary Neville fumes over Man United conduct regarding Mourinho leak He is currently without a job and the Mirror report that Manchester United chiefs have asked Zidane to remain unemployed for now. And Collymore says United must sack Mourinho due to his dealings with his key players.

Jose Mourinho facing sack if Manchester United lose to Newcastle Jose Mourinho facing sack if Manchester United lose to Newcastle Zinedine Zidane is the 8/11 favourite to be the next Manchester United manager, with Antonio Conte at 8/1 and Arsene Wenger 10/1. Speaking in an interview with BBC Radio 5 live , Sutton said: "I don't think Mourinho will make Christmas".

Opera singer Montserrat Caballe dies in Barcelona, aged 85 Opera singer Montserrat Caballe dies in Barcelona, aged 85 Throughout her career, Montserrat Caballé starred in 90 opera roles, appearing on stage in 4,000 performances. Her voice was described by her fans as inspirational, legendary and not of this world.