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Market Chatter: RBI Not Keen on Interest Rate Hike to Help Weak Indian Rupee

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The Reserve Bank of India is not in favor of raising the interest rates to take the weakening Indian rupee, according to a Reuters report on Friday, quoting sources.

The central bank is reinforcing that inflation will guide its policy on interest rates, rather than currency. It could adopt other measures, including dollar deposit schemes for non-resident Indians and tax changes for debt investors, the report said.

"There doesn't seem to be an urgent need for the central bank to jump into rate hikes," said one of the sources cited in the ​report.

India's rupee ​has fallen nearly 6% to a record low of nearly 96.96 rupees per dollar on Thursday, since the Iran war began late in February.

The RBI's Monetary Policy Commission, which will next meet on June 5 to decide on the interest rates, held consultations with economists on Thursday, the report said.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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