RBI Faces Stakes of Inflation Fight as Dollar Flows Raise Rate Hike Bets

The Reserve Bank of India (RBI) has successfully drawn in dollars to bolster its foreign-exchange reserves and defend the rupee, but this influx is now adding pressure on the central bank to adopt a more hawkish monetary policy stance.

The RBI's measures have drained over 1 trillion rupees ($10.4 billion) through bond sales and other means to prevent excess liquidity from fueling inflation pressures.

Economists at Nomura Holdings Inc., Deutsche Bank AG, and Australia and New Zealand Banking Group are predicting the RBI's first rate hike since early 2023 next week, with some expecting a move in December or even earlier.