USD/INR: RBI's flexibility to hike further could support the Rupee – Commerzbank

The Reserve Bank of India (RBI) hiked the policy rate by 25 bps as expected. RBI’s hike may not be the last, which could support the Rupee, economists at Commerzbank report.

RBI hiked and is open to more tightening

“RBI hiked the benchmark repo rate by 25 bps as expected to 6.50%.RBI kept the door open for further tightening. 

“We see at least another 25 bps hike in the first half this year and possibly even 50 bps particularly if domestic demand remains firm and core inflation fails to cool. This should provide some support for INR.”