RBI Holds Rates Steady, Aims to Boost Exports and Currency Stability
The Reserve Bank of India (RBI) maintained its key interest rates unchanged at 5.5 percent, keeping a neutral stance as it awaits clarity on US tariffs and the impact of previous rate cuts and tax reductions. Meanwhile, the rupee strengthened due to domestic market strength, falling oil prices, and measures taken by RBI Governor Sanjay Malhotra.
The RBI left the repo rate unchanged at 5.5 percent in its fourth Monetary Policy of FY26, as expected. The Governor announced measures to aid exports and stabilize the currency. These include allowing Indian banks to grant rupee loans to companies in neighboring countries and introducing official reference exchange rates for key trading partners.
The dollar index traded lower at 97.75, while Brent oil fell to $65.54 per barrel. Domestic markets surged, with Sensex jumping 715.69 points to 80,983.31 and Nifty surging 225.20 points to 24,836.30. The rupee recovered from an all-time low, opening at 88.79 and settling at 88.68, higher by 12 paise. Foreign Institutional Investors (FIIs) offloaded equities worth ₹2,327.09 crore on Tuesday, but the rupee recovered the next day.
The RBI's rate decision and Governor Malhotra's measures aim to support exports and currency stability. Despite FII outflows, the rupee strengthened, benefiting from domestic market strength and lower oil prices. The markets await further clarity on global trade developments.
