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4 Aug 2014
RBI key interest rates to remain unchanged on Tuesday - TD Securities
FXStreet (Łódź) - Cristian Maggio, Head of Emerging Markets Research at TD Securities suggests that the Reserve Bank of India won't announce any changes to interest rates on Tuesday but in October they might raise the repo and reverse repo rates to 8.25% and 7.25%, respectively.
Key quotes
"Conditions for the RBI to change monetary policy are not ripe yet. The weather uncertainty will keep the Bank sitting on its hands for a while, until at least the October meeting, if not December or next year."
"This means that investors will be left on the watch for more weather-related information in order to assess the short and medium term inflation outlook."
"As the RBI holds, but continues to buy USD to beef up the FX reserves, we see the rupee fluctuating in the 59.00/61.00 trading range."
"At the time of writing, USD/INR is exchanged at the upper-end of this band at 60.9350, which suggests possible downside moves."
"INR-denominated bonds—especially the long-end of the curve—are an attractive value proposition as the RBI is set to remain on hold for a few months, while the government is planning to introduce reforms that will shrink the fiscal deficit, and reduce issuance growth in the future."
Key quotes
"Conditions for the RBI to change monetary policy are not ripe yet. The weather uncertainty will keep the Bank sitting on its hands for a while, until at least the October meeting, if not December or next year."
"This means that investors will be left on the watch for more weather-related information in order to assess the short and medium term inflation outlook."
"As the RBI holds, but continues to buy USD to beef up the FX reserves, we see the rupee fluctuating in the 59.00/61.00 trading range."
"At the time of writing, USD/INR is exchanged at the upper-end of this band at 60.9350, which suggests possible downside moves."
"INR-denominated bonds—especially the long-end of the curve—are an attractive value proposition as the RBI is set to remain on hold for a few months, while the government is planning to introduce reforms that will shrink the fiscal deficit, and reduce issuance growth in the future."