Indian rupee gets RBI booster shot, but that was not supposed to happen; find out why
India’s restrictions on overseas investment in its bond market mean that the link between higher rates and the currency isn’t as strong as in Indonesia and the Philippines, where central banks have tightened policy in a bid to support their exchange rates. Historically, India has seen more inflows into its equity markets, which respond positively to rate cuts.
Reserve Bank of India Governor Urjit Patel signaled that Wednesday’s interest-rate hike was not aimed at defending the rupee. Analysts say that the move will still provide the much-needed support to the currency. Image source: PTI