Is RBI's step justified? Is the cautious step a state of defense or an act of wit?.
What do you think? Should we try to understand this a little better? Well, let's go ahead and do that! Maybe our understanding of the entire situation will be a bit clearer.
Such astonishing similarity can be explained as follows: when the repo rate falls, bond prices go up and market comes down. Markets have optimistically accepted the maintained repo rates even this time around. On the day of declaration of rates, BSE Sensex rallied up 1.1% and Nifty also observed a 1.2% rise. On the same grounds, the rupee has appreciated against the dollar with numbers reaching Rs 61.82 per dollar on Tuesday, with a closing rate of 62.01. RBI's step has attracted many FIIs in to the Indian markets as well.
Another interesting theory that I have observed is that when it comes to the real rate, India accounts for the lowest amongst its peers.
It isn't easy to make a smooth, calculable explanation. You and I can only make analyses based on our various assumptions and our own understanding of India's economy. But again, all the factors that are taken into consideration can change by the hour! So, let's wait and watch to see what happens next!
If you want to present your own points of view, please post them in comments section below!
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