RBI holds repo rate at 5.25% and unveils rupee support via foreign-capital incentives

The Reserve Bank of India (RBI) held its repo rate at 5.25% for the third straight meeting, keeping its neutral stance. In parallel, the RBI announced targeted measures to support the rupee, aiming to attract foreign capital without relying mainly on further rate changes. Key policy details: the RBI maintained the repo rate at 5.25% and kept other standing facilities unchanged (SDF 5.0%, MSF and bank rate 5.5%). The package includes tax exemptions for eligible foreign investors on interest income and capital gains from Indian government securities (G-secs), more favorable terms for foreign-currency deposits from non-resident Indians, and subsidies on hedging costs for certain offshore borrowings. Macro context matters. The RBI cut its GDP growth forecast for FY2026/27 to 6.6% (from 6.9%) and raised its inflation projection to 5.1% (from 4.6%). Oil-price pressures remain a central driver of rupee weakness, since India imports about 85% of its crude oil, and West Asia geopolitical risk is increasing costs. For crypto traders, the RBI reiterated concerns about USD-denominated stablecoins as potential financial-stability risks when policymakers are focused on defending the currency. The central bank also continued promoting the digital rupee (CBDC), which can strengthen state control over money flows. If foreign-capital incentives improve FX stability, regulatory pressure on crypto could soften; if not, the next policy cycle may become less supportive. Reserve Bank of India holds repo rate at 5.25%—the market impact may hinge on whether the FX inflow measures successfully counter oil- and geopolitics-driven pressure on the rupee.