India’s Monetary Policy Committee (MPC) kept both the repo and the reverse repo rate unchanged and maintained its accommodative policy stance. In the view of analysts at Standard Chartered, RBI’s dovish rhetoric poses yet another headwind – they remain bearish on the INR.

Dovish RBI supports bearish INR view

“MPC maintains status quo on repo and reverse repo rates. We continue to expect the repo rate to be hiked from August; corridor normalisation likely by June vs our previous expectation of April.”

“We think the RBI’s dovish rhetoric relative to market expectations will act as another headwind for the INR, particularly at a time when major central banks are adopting a much more hawkish stance.”

“We maintain our targets for USD/INR at 75.50 by end-March and 77.50 by year-end.”