Friday, September 29

India shares rise, rupee strengthens after RBI rate hike

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BENGALURU — Indian shares advanced, the rupee strengthened and bond yields rose after the country’s central bank hiked a key policy rate for the third time to tackle persistently high inflation in Asia’s third-largest economy.

The Reserve Bank of India (RBI) raised the key policy repo rate by 50 basis points.

“With inflation expected to remain above the upper tolerance threshold in Q2 and Q3 of the current financial year, the MPC stressed that sustained high inflation could de-stabilize inflation expectations and harm growth in the medium term,” RBI Governor Shaktikanta Das said.

India’s annual consumer inflation remained above the 7% mark in June and beyond the RBI’s upper tolerance limit of 6% for the sixth month in a row.

The NSE Nifty 50 index rose 0.32% to 17,436.95 by 0454 GMT, and the S&P BSE Sensex advanced 0.36% to 58,509.13, after the policy decision.

India’s 10-year benchmark bond yield rose to 7.2317% after the policy decision, while the rupee was trading at 79.03 per dollar. (Reporting by Rama Venkat in Bengaluru; Editing by Shounak Dasgupta)