Apurva Sheth of Samco Securities said that even after the Bank of India cut interest rates on Friday, real interest rates are still hovering around 5%, and this interest rate level is too restrictive for an economy that requires healthy nominal growth to maintain profits and taxes. In an email, he said that with inflation under control and strong growth, the Bank of India still has plenty of room for further easing. The weakening of the currency is the main cause of concern for the Bank of India. He said, “Right after cutting interest rates, we saw that the rupee had taken back some of the gains of the past two days. “Further interest rate cuts will push the rupee further lower until there is a massive return of foreign portfolio investment and foreign direct investment. He added that after moderate inflation, exchange rate and growth are the two major factors the Bank of India needs to balance at present.

Apurva Sheth of Samco Securities said that even after the Bank of India cut interest rates on Friday, real interest rates are still hovering around 5%, and this interest rate level is too restrictive for an economy that requires healthy nominal growth to maintain profits and taxes. In an email, he said that with inflation under control and strong growth, the Bank of India still has plenty of room for further easing. The weakening of the currency is the main cause of concern for the Bank of India. He said, “Right after cutting interest rates, we saw that the rupee had taken back some of the gains of the past two days. “Further interest rate cuts will push the rupee further lower until there is a massive return of foreign portfolio investment and foreign direct investment. He added that after moderate inflation, exchange rate and growth are the two major factors the Bank of India needs to balance at present.