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A weak monsoon is raising food-price risks, while the falling rupee is making imports more expensive.
Indiaโs rupee retreated even after the central bank hiked interest rates for the first time in four years, as the lack of more aggressive steps to tighten liquidity and support the currency left traders disappointed.
Indiaโs foreign exchange reserves dropped by the most in almost two years as the central bank stepped in to support the rupee amid surging oil prices.
Indiaโs rupee has room to appreciate from the current levels, Reserve Bank of India Deputy Governor Poonam Gupta said, striking an optimistic note on the currency after a period of weakness recently.