A day after the Reserve Bank of India (RBI) hiked its repo rate by 25 basis points to 6.50%, Engineering Export Promotion Council (EEPC) of India chairman Ravi Sehgal has said that the decision of raising interest rate is a big negative for exporters, as it would impact competitiveness of exporters.
EEPC India chairman noted that the exporters would become less competitive in a tough global market due to the rate hike. He also pointed that rate of borrowing has been increasing which is certainly not a good news for exporters, as it would increase the overall cost of production for exporters, particularly in the engineering sector, due to rising prices of raw material like steel.
RBI in its third bi-monthly monetary policy review of 2018-19 has hiked repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) to 6.50%, to curb inflation and pre-empt a rout of the rupee as the global trade war escalates. Consequently, the reverse repo rate under the LAF stands adjusted to 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75%. Further, the RBI has maintained a ‘neutral’ stance in the policy as it aimed to contain inflation while not chocking growth.
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