Economists at Commerzbank expect the Reserve Bank of India to stand pat for now amid a stable USD/INR.

Lower inflation provides leeway for RBI

“April headline inflation moderated further to the lowest level in 18 months. More importantly, core inflation, which strips out food and energy, also softened to 5.3% from just under 6% previously. This provides RBI leeway on monetary policy. It will reinforce RBI’s bias to leave policy unchanged for now. Further moderation in inflation will also give it scope to consider looser monetary policy conditions if needed.”

“We expect RBI to stay on hold for the foreseeable future.”

“On FX, RBI is content to see a relatively stable USD/INR. It has held mostly within the 81-83 range this year.”