Comments from RBI Governor Das this week provided more support for our view that the RBI will frontload its monetary policy tightening with a 50bp hike in June, and that the Reserve Bank will continue to intervene in the FX market to prevent a substantial depreciation of the rupee. Meanwhile, although the new export restriction, this time on sugar, is unlikely to have much of an effect on trade, it is another example of an increasing trend that threatens to fuel further food price inflation.
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