RBI Clouds Outlook

The outlook is clouded by the proximity of the RBI meeting tomorrow, the Central Bank is expected to remain on hold but could take tentative steps to withdrawing pandemic era stimulus. Finance Minister Sitharaman said yesterday that India had learnt its lessons from the last taper tantrum, adding the government and the RBI were wary of this. Elsewhere there were reports yesterday that India is considering giving some tax exemption to foreign investors settling sovereign bond purchases on Euroclear to speed up the inclusion of its debt in global indices, though uncertainty around the weights of Indian bonds in the index is limiting market reaction. INR was under pressure yesterday, declining the most among its peers, as elevated oil prices and a selloff in stocks negatively impacted sentiment. Oil has fallen from its recent highs, but remains some 102% higher than this time last year which could pose problems for net importers like India.