Former RBI chief Rajan urges Fed to hike rates, relaxed on rupee
CNBC-TV18 2d ago·28 Aug 2026, 9:55 am
Former Reserve Bank of India Governor Raghuram Rajan has advised the United States Federal Reserve to continue raising interest rates. He argues that despite recent cuts, global financial conditions remain loose. This is driven by strong investment, high fiscal spending, and resilient consumer demand, which could fuel inflation if not checked.
This perspective is significant for Indian markets. A prolonged rate hike cycle in the US typically strengthens the US dollar. A stronger dollar can pressure emerging market currencies like the rupee, potentially increasing the cost of imports and foreign debt. However, Rajan's comments suggest he views the rupee as resilient, implying the currency may withstand this pressure better than expected.
Investors should monitor the Fed's upcoming policy decisions and the resulting movement in the dollar index. While the outlook for US rates remains a key global risk factor, the stability of the rupee will depend on how India manages its own inflation and capital flows.
Key takeaways
- Category: Economy.
- Flagged as a high-impact, market-moving story.
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