RBI may alter rigid stance after rupee stabilises: PM

RBI may consider reversing its recent hike in short-term interest rates after it succeeds in stabilising the rupee against the US dollar, Prime Minister Manmohan Singh said on Friday.

“Once these short term pressures have been contained, as I expect they will be, the Reserve Bank can even consider reversing these pressures,” Singh said at a function here. Earlier this week, RBI has raised short-term interest rates to check rupee fall, which fell to an all time high of 61.21 against the greenback.

The central bank has also hiked the lending rates for banks, limiting the borrowing of the system at Rs 75,000 crore and sucking up of Rs 12,000 crore, to make the domestic currency dearer.

The Marginal Standing Facility (MSF) rate was increased to 10.25 per cent from current 8.25 per cent. Accordingly, the Bank Rate also adjusted to 10.25 per cent with immediate effect.