The measures taken by the Reserve Bank of India late Monday to curb excessive volatility in the rupee will not influence its upcoming monetary policy review, Finance Minister Palaniappan Chidambaram said Tuesday.
The RBI is set to hold its next rate-setting meeting on July 30. Economists widely expect it to retain the repo rate at 7.25 percent and the reverse repo rate at 6.25 percent.
The RBI increased both the bank rate and the marginal standing facility, or MSF, rate to 10.25 percent each from 8.25 percent. It also unveiled plan to conduct open market sales of government bonds worth INR 120 billion on July 18 to absorb liquidity.
These steps should not be read as a prelude to policy rate changes, Chidambaram said. Further, he noted that the RBI action will not impact the interest rates of banks.
Measures are taken to curb excessive speculation and reduce volatility and stabilize the rupee. The value of rupee will depend upon foreign exchange earnings and spending, he added.
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