The smart central banker - RBI's Rajan

Reserve Bank of India (RBI) surprised majority of market participants by keeping rates unchanged to 7.75%. Whilst I wasn't surprised, I have to credit  Rajan for his smart move. It makes great sense when taken into account following factors:

>As a CB assess the FOMC statement today and its impact on EMFX especially USD/INR volatility.

> Assess the political risks arising due to elections and thereby the investors sentiment affecting equity and bonds flows.

> Analyse the inflation trend for couple of months into next year.

> In short keep master weapon 'rate hike' as the last option in its arsenal.

USD/INR now heading for crucial resistance of 62.20 after basing on weekly 60.70 support line. My stat arb still  likes higher USD/INR on weeklies.