Brown Brothers Harriman’s (BBH) Elias Haddad expects the Reserve Bank of India (RBI) to keep its policy rate at 5.25%, but warns of a potential hawkish surprise aimed at supporting the Rupee. Haddad notes that aggressive RBI intervention, official jawboning and lower Oil prices have already pulled USD/INR back from record highs, helping to stabilise the currency after recent weakness.
"The Reserve Bank of India (RBI) is expected to keep the policy rate at 5.25% for a third consecutive meeting (Friday)."
"USD/INR has already dipped from a record high of around 97.0000 on May 20 to 95.0000 on Friday driven by aggressive RBI intervention, RBI Governor Sanjay Malhotra jawboning, and a slide in crude oil prices."
"The risk is a hawkish surprise to further curtail INR weakness."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)