By Anushka Trivedi
MUMBAI, Feb 8 (Reuters) - The Indian rupee eked out
gains on Wednesday after the country's central bank raised the
key lending rate by an expected 25 basis points and hinted that
more tightening was possible.
The rupee finished the session at 82.4925 per U.S.
dollar after trading in an about 25 paisa range, as compared to
its last close of 82.70.
The monetary policy committee (MPC) raised the repo rate to 6.50% in a split decision, with the central bank
saying its policy stance remains focused on the 'withdrawal of
accommodation'.
Most analysts had expected this hike to be the final
increase in the RBI's current tightening cycle.
The terminal repo rate expectations have been between
6.50%-6.75% for a while, so this policy outcome was largely
within expectations from the rupee point of view, said a foreign
exchange trader.
Forward premiums, though, benefited from no change in
stance, with USD/INR 1-year implied yield up 7 basis points to
2.17%.
"The April policy is likely to be a close call, depending on
incoming inflation and growth data prints," said Gaura Sen
Gupta, an economist at IDFC FIRST Bank.
"If inflation evolves as projected, the February rate hike
could be the last one. However, if inflation pressures worsen or
the Fed rate hiking-cycle extends, another 25 bps hike (from the
RBI) can't be ruled out."
The RBI on Wednesday trimmed its fiscal 2023 inflation
projections to 6.5%, from 6.7% earlier, and pegged the next
financial year's growth at 6.4%.
Meanwhile, the dollar index slipped 0.3% after
Federal Reserve Chair Jerome Powell did not meaningfully harden
his tone on inflation in a speech overnight, as some market
participants had expected after a robust U.S. jobs report.
Most Asian emerging market currencies and stocks were
trading higher.
(Reporting by Anushka Trivedi; Editing by Savio D'Souza)
anushka.trivedi.thomsonreuters.com@reuters.net))
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