No room for rate cut on Jul 30 due to rupee plunge: Crisil
Quotes

No room for rate cut on Jul 30 due to rupee plunge: Crisil

Last Updated: Thursday, July 11, 2013, 16:19
 
 Comment 0
 
No room for rate cut on Jul 30 due to rupee plunge: Crisil
Mumbai: The rupee depreciation is likely to hurt the inflation fight and restrict the Reserve Bank from cutting its policy rates at the forthcoming monetary policy review by month end, says ratings agency Crisil.

"If the rupee averages at 58 to the dollar this fiscal, average headline inflation could rise to 6 per cent compared to our baseline call of 5.3 percent. This leaves little room for monetary easing despite the sharp slowdown in GDP growth," Crisil said in a report today.

The central bank would cut rates by a maximum of 0.50 percent in the remainder of the fiscal, it added.

The Reserve Bank will announce the first quarter monetary policy on July 30.

Headline inflation has declined for three consecutive months till May, when it came to 4.7 percent from 7.3 percent in February.

The rupee has depreciated by over 12 percent since the beginning of the fiscal. It has slid heavily since May 20, ever since an announcement was made by the US Federal Reserve that it might pull back its liquidity-infusing bond repurchases as the domestic employment situation and the economy improved.

The rupee touched a lifetime low of Rs 61.21 to a dollar earlier on Wednesday, forcing the central bank and capital markets regulator Sebi to take unconventional measures to arrest the slide.

Courtesy the measures from RBI and Sebi, the rupee has recovered in the last two days.

Crisil said the rupee fall gets passed on in the prices of petrol, fuelling inflation while for diesel, whose prices are partially still controlled, the under-recoveries will shoot up.

PTI



First Published: Thursday, July 11, 2013, 16:14


Comments


comments powered by Disqus
John Kery with Indian Biz Honchos
John Kery with Indian Biz Honchos
Honda Mobilio MPV
Honda Mobilio MPV
BRICS Annual Summit 2014
BRICS Annual Summit 2014
Tata Zest Standout Features: In Pics
Tata Zest Standout Features: In Pics
New car launches in July
New car launches in July

Web Wrap
Contact Us : Privacy Policy : Legal Disclaimer
Copyright © Zee Media Corporation Ltd. All rights reserved