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FXstreet.com (Barcelona) - Against expectations of a 25bp or even 50bp rate cut, the RBI decided to keep its rates unchanged at 8% (repo rate), 7% (reverse repo) and Cash Reserve Ratio at 4.75%.

A counterintuitive move took place: the INR sold off against the USD in a kneejerk reaction. "The INR reaction is even more surprising in the aftermath of the Greek vote that has triggered a rally in the EMFX space. Even though this may be only a temporary reaction, the rupee remains excluded from the uplift that news from Athens have induced on most risk assets", wrote Cristian Maggio, analyst at TD Securities, pointing to concerns about growth in India after IP and GDP figures, and chances of rating downgrade. "There's a material risk that rating agencies downgrade India to junk on the inability of the government to rein in public spending and delivering reforms that would set the ground for sustainable long-term growth", added Maggio.

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