The market was not expecting the sudden reversal of the cycle of the interest rate in the year of 2013, this move happened after the charge of the Reserve Bank of India (RBI) was taken over by Raghuram Rajan during early September. In comparison to where it stood during the beginning of the year, there is a possibility that the interest rate or repo rate, which is charged by the Reserve Bank of India(RBI) to the banks that borrow money from them, may close at 8 percent by the end of this year.
During the mid quarter monetary policy review which happened on Wednesday, it has been expected that the repo rate will increase another 25 basis point from the present standing of 7.75 percent. The rupee had fallen down to Rs. 68.85 as of August 28th, this figure was the lowest it had been and was a much unexpected drop.