Photo: MintMumbai: All eyes are on India’s central bank to see if it will follow Indonesia in raising interest rates to help calm financial markets amid an emerging-market rout. While the Reserve Bank of India has intervened through bond purchases, sentiment is dour. Its intervention in the foreign exchange market is tightening liquidity in the banking system and driving up borrowing costs. That mirrors Indonesia’s reserves dropping to a 10-month low as Bank Indonesia drained more than $7 billion of reserves in three months to arrest a slide in the rupiah. Bank Indonesia hiked rates even though it forecast inflation will remain within its 2.5% to 4.5% target band.

Source: Mint May 18, 2018 12:33 UTC