RBI Pushes Rupee's Global Use With Cross-Border Lending Move

The rupee remained unchanged after the Reserve Bank of India (RBI) kept the repo rate at 5.50% and maintained a neutral stance in its October policy review. In a fresh boost for the currency, the central bank unveiled steps to promote the use of the rupee.

Indian banks can now lend in Indian Rupees to non-residents from Bhutan, Nepal and Sri Lanka for cross-border transactions. RBI also plans to prepare transparent reference rates for currencies of India's major trading partners. 

Rupee Outlook: Analysts' Take

SEBI-registered Front Wave Research said the RBI's decision to hold rates unchanged and reinforce its policy stance on the internationalisation of the rupee has helped stabilize the USDINR and given equities some relief from currency pressure. 

It also warned that rising protectionism and anti-China rhetoric could create geopolitical risks in the coming weeks.

Analyst Pradeep Carpenter said the rupee strengthened slightly to around 88.8 against the U.S. dollar after the RBI's announcement. He said the RBI's regular interventions in the foreign exchange market have contained volatility. 

Carpenter said inflation is under control and growth has stabilized, adding that the RBI will continue to monitor developments related to U.S. tariffs and global exports.

SEBI-registered analyst Mayank Singh Chandel said India's foreign reserves are healthy and continue to cushion the rupee during global volatility. He said the RBI's steady policy stance is keeping both the equity market and the rupee stable.

What Next?

Pradeep Carpenter said the RBI's decision signaled a pause for now but left room for a possible rate cut in December. He said inflation remains under control and growth appears stronger, though global risks continue to make the central bank cautious.

Mayank Singh Chandel stated that the economy is stable, with steady prices and easy borrowing conditions. He added that low inflation is boosting investor confidence, while India's strong foreign reserves continue to provide a cushion against potential shocks.

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