RBI will encourage rupee to weaken

It will also maintain liquidity so that govt borrowing doesn't push yields up

The Reserve Bank of India (RBI) surprised by refusing to cut rates last week. Given a slowing economy, low consumption and no obvious trigger to lift the spirits, the central bank was widely expected to drop the policy rate for the sixth time in succession. Instead it decided to keep the repurchase rate (repo) unchanged at 5.15 per cent (with the reverse repo at 4.9 per cent) and also made no other changes. It has revised growth expectations down sharply. 

Multiple considerations are involved in monetary policy decisions. There are inflation and inflation expectations. There are growth expectations. There’s the exchange