The rupee recovered on Wednesday from its record low close of 77.78 per cent in the previous session after the Reserve Bank of India hiked its key lending rate by 0.5 per cent andmaintained a hawkish stance thereby restricting significant losses for thecurrency.
With inflation showing no signs of abatement, the Reserve Bank is likely to increase the benchmark lending rate in quick succession in its forthcoming monetary policy review on Wednesday, a hint for which has already been given by Governor Shaktikanta Das, opined experts.
The Reserve Bank of India is likely to raise the policy repo rate by 40 basis points on Wednesday and hike it further by 0.35 per cent in August, taking it to the pre-pandemic level of 5.15 per cent.
The Reserve Bank of India is expected to aggressively tighten policy in the next meeting after minutes of its off-cycle policy review earlier this month revealed that rate setters pitched for front loading hikes amid a worsening inflation outlook.