Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

India Rupee Drops as RBI Keeps Borrowing Costs Unchanged

A women waves for a cab outside the Reserve Bank of India in Mumbai. Photographer: Paul Hilton/Bloomberg
A women waves for a cab outside the Reserve Bank of India in Mumbai. Photographer: Paul Hilton/Bloomberg

June 18 (Bloomberg) -- India’s rupee fell the most in a week, erasing earlier gains, after the central bank unexpectedly kept borrowing costs unchanged and Fitch revised the nation’s rating outlook to negative from stable.

The benchmark repurchase rate will stay at 8 percent, the Reserve Bank of India said in a statement in Mumbai today. Only four of 25 economists in a Bloomberg News survey predicted the outcome, with 19 expecting a 0.25 percentage-point cut and the remainder a half-point reduction. The currency had advanced to a one-week high earlier as projections showed pro-bailout parties won enough seats to control Greece’s parliament, reviving investor interest in riskier assets.

“It’s a delicate balancing act, as growth momentum is poor and policy remains too restrictive in our view, particularly given the weaker international back drop,” Jonathan Cavenagh, a currency strategist in Singapore at Westpac Banking Corp., wrote in an e-mailed response. “Near-term risks are that the rupee will underperform broader risk-on move throughout the region.”

The rupee declined 0.8 percent to 55.9200 per dollar in Mumbai, the biggest drop since June 8, according to data compiled by Bloomberg. It swung between 55.2700, the strongest level since June 11, and 56.0325, the weakest since June 12. One-month implied volatility, a measure of exchange-rate swings used to price options, fell 25 basis points, or 0.25 percentage point, to 11.7 percent.


“While growth in 2011-2012 has moderated significantly, headline inflation remains above levels consistent with sustainable growth,” the monetary authority said today. Fitch projects wholesale prices to rise an average 7.5 percent in the year through March 2013, “higher and stickier” than earlier expected, the ratings company said in a statement today.

Today’s central bank decision contrasts with rate cuts in Brazil and China in the past three weeks as the impact of Europe’s turmoil fans through Asia and dominates the agenda of a Group of 20 summit starting in Mexico today. Greece’s New Democracy and Pasok parties won enough seats to form a majority in the 300-member parliament, according to an official projection, easing concern the nation would reject austerity measures needed to qualify for international aid.

Three-month onshore currency forwards traded at 56.92 per dollar, compared with 56.61 on June 15, and offshore non-deliverable contracts were at 57.07 from 56.72. Forwards are agreements to buy or sell assets at a set price and date. Non-deliverable contracts are settled in dollars.

To contact the reporter on this story: Jeanette Rodrigues in Mumbai at

To contact the editor responsible for this story: Sandy Hendry at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.