Inflation appears to have finally turned a corner in India, heightening the prospects for an interest rate cut at the end of the month, and one of the biggest beneficiaries could be the rupee, said market watchers.
India’s headline inflation for December came in at 7.18 percent, its lowest level in three years – against forecasts of 7.4 percent – marking three consecutive months of declines. This offers room for the Reserve Bank of India (RBI) to support growth via a rate cut, which in turn could improve the sentiment for the country’s flagging currency, said analysts.
“The markets will cheer a rate cut, and that could elicit capital inflows. Anything that restarts growth and the investment cycle will be positive for the rupee,” Aninda Mitra, head of Southeast Asia economics at ANZ told CNBC on Monday.
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