India keeps interest rates on hold but rupee further sinks

Agence France-Presse

An Indian man walks outside the headquarters of the Reserve Bank of India in Mumbai, India, Tuesday, July 30, 2013. The RBI kept all key interest rates unchanged Tuesday and asked the government to take urgent steps to cut down growth and boost investments. AP Photo/Rajanish Kakade

MUMBAI?India?s central bank kept benchmark interest rates unchanged Tuesday as part of its struggle to prop up the battered rupee but the currency weakened further to hover just above a lifetime low.

Deciding against a rate cut, the Reserve Bank of India (RBI) made it clear its key priority right now is to support the rupee at the expense of spurring an economy that has been expanding at its weakest level in a decade.

India has been forced to ?address external sector concerns,? the bank said, as it announced it would keep its main lending rate to commercial banks?the repo?unchanged at 7.25 percent.

The RBI cut its forecast for economic growth for the current financial year to 5.5 percent from an earlier projection of 5.7 percent.

But in the absence of any fresh monetary tightening steps, the currency slid to 60.40 rupees to the dollar, close to its record low of 61.21 rupees hit earlier this month.

?The RBI has done everything to defend the rupee?but it did not hike rates,? Param Sarma, chief executive at NSP Forex, told AFP.

Source: http://business.inquirer.net/135705/india-keeps-interest-rates-on-hold-but-rupee-further-sinks

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