The Savior does it again , As expected the RBI has kept the key rates unchanged while announcing its mid year policy.
CRR 6% (unchanged)
Repo rate 8.5% (unchanged)
Reverse repo 7.5 % (unchanged)
and the SLR 24 %
http://wp.me/pc3rd-b
The Indian economy has taken a serious hit as the quarterly policy describes :-
On Growth front its been moderated to 6.9% down from 7.7% in the Q1, and on the yearly basis 8.8%. Industrial performance detoriated. The only satisfaction is on the food front as the rabi crops has been satisfactory.
Exports have gone for the toss mere 13.6 % from an average of 40% in the 1st half og 2011-2012. The rupee has depreciated and RBI coming out in open and reducing the net overnight open position, or trading limits, for banks in the foreign exchange market. This is expected to trigger the selling of US dollars by some foreign exchange dealers who had been holding the greenback in hopes that it would gain further.
1) The impact of lowering the trading limits will be “huge because banks will not be able to keep speculative positions open for a long time.
2) The RBI said forward contracts booked by foreign institutional investors, once cancelled, cannot be rebooked.
To conclude the inflation remains the cause of concern , risks for growth has increased and the RUpee remains under stress.
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