Source: The Reserve Bank of India does not support defending the rupee through interest rate hikes, prioritizing inflation control instead.

Three sources familiar with the matter said that the Reserve Bank of India does not believe that raising interest rates is the best means to defend the pressured rupee. This stance contradicts market expectations and indicates that the policy on borrowing costs will be based on inflation rather than the exchange rate. Informed sources who are knowledgeable about the Reserve Bank of India's thinking revealed that the bank still holds regulatory instruments that have not been used. The media previously disclosed that possible measures include launching a scheme for Indian diaspora dollar deposits and adjusting tax policies for bond investors. A source added that all alternative solutions are being considered and the central bank is coordinating with the government for assessment. They stated that there is currently no urgent need for the central bank to raise interest rates.