Loading…
The Indian Rupee appreciated by 47 paise against the US Dollar, closing at 92.59 per USD.
The Reserve Bank of India's Monetary Policy Committee (MPC) unanimously decided to keep the benchmark repurchase (repo) rate unchanged at 5.25%.
Factors contributing to the Rupee's strength included a de-escalation of geopolitical tensions in West Asia and the RBI's decision to pause policy rates.
The MPC cited heightened uncertainty from the West Asia conflict and its impact on crude oil prices as reasons for maintaining the current rate.
The Repo Rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks. It is a crucial tool for the RBI to control inflation and manage liquidity in the economy. A higher repo rate makes borrowing more expensive for banks, which in turn leads to higher lending rates for consumers and businesses, thereby reducing money supply and curbing inflation. Conversely, a lower repo rate encourages borrowing and stimulates economic activity.
Simple Analogy: Think of the repo rate as the interest rate your bank pays to borrow money from the central bank. If this rate goes up, your bank might charge you more for a loan, and if it goes down, your loan might become cheaper.
India's central bank, responsible for formulating and implementing monetary policy, regulating the banking system, issuing currency, and managing foreign exchange reserves.
A six-member statutory body constituted under the RBI Act, 1934. Its primary mandate is to determine the policy interest rate (repo rate) to achieve the inflation target (currently 4% with a +/- 2% tolerance band) while keeping in mind the objective of growth.
RBI utilizes monetary policy tools, primarily the repo rate, to manage inflation. A pause or hike in rates often reflects the central bank's assessment of current and projected inflationary trends.
Conflicts or instability in major oil-producing regions, such as West Asia, can disrupt global oil supply chains, leading to volatility and often an increase in international crude oil prices.
As a significant net importer of crude oil, India's economy is highly sensitive to global oil price fluctuations. Higher crude prices inflate India's import bill, potentially widening the current account deficit, fueling domestic inflation, and exerting depreciation pressure on the Indian Rupee.
Higher domestic interest rates can attract foreign portfolio investment (FPI) into a country, as investors seek better returns. This inflow of foreign capital increases demand for the domestic currency, leading to its appreciation.
GS Paper III - Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment. Government Budgeting. Monetary policy. Exchange rate management.
General Awareness - Indian Economy, Current Affairs, Banking & Finance.
General/Financial Awareness - Monetary Policy, RBI functions, Repo Rate, Exchange Rates, Banking terms.
General Awareness - Basic Economy, Current Affairs.
Consider the following statements: Statement-I : In the post-pandemic recent past, many Central Banks worldwide had carried out interest rate hikes. Statement-II : Central Banks generally assume that they have the ability to counteract the rising consumer prices via monetary policy means. Which one of the following is correct in respect of the above statements?
Answer: Both Statement-I and Statement-II are correct and Statement-II is the correct explanation for Statement-I
Which one of the following is not the most likely measure the Government/ RBI takes to stop the slide of Indian rupee?
Answer: Following an expansionary monetary policy
Consider the following statements: 1. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report has recommended a debt to GDP ratio of 60% for the general (combined) government by 2023, comprising 40% for the Central Government and 20% for the State Governments. 2. The Central Government has domestic liabilities of 21% of GDP as compared to that of 49% of GDP of the State Governments. 3. As per the Constitution of India, it is mandatory for a State to take the Central Government's consent for raising any loan if the former owes any outstanding liabilities to the latter. Which of the statements given above is/are correct?
Answer: 1 and 3 only
High
The rate at which RBI lends money to commercial banks.
A six-member body that determines the policy interest rate to achieve the inflation target.
The value of one currency in terms of another.
When a country's total value of imported goods, services, and transfers exceeds its total value of exported goods, services, and transfers.