Reserve Bank of India raised the repo rate 25bps to 5.50% — its first hike in
four years — and shifted policy stance from "neutral" to "calibrated
tightening". Governor Sanjay Malhotra said this signals entry into a "relatively
mild" tightening cycle. The Indian rupee slid as much as 0.4% to 96.85 per US
dollar on Wednesday, the worst-performing Asian currency that day and
approaching May’s record low of 96.9650; traders said the 25bp hike and the
absence of more aggressive liquidity tightening were insufficiently hawkish to
offset pressure from higher oil prices and rising US interest rates.
