Greek crisis may force RBI to delay exit policy

The escalating debt crisis in Greece and the fears of the contagion engulfing a few other Eurozone economies may prompt the Reserve Bank of India (RBI) to slow the pace of its exit from the monetary stimulus measures, say leading experts.

"With the uncertainty in the markets, the RBI may not prefer to withdraw the support at this stage. The calibrated withdrawal of stimulus may be reviewed," Citi India Chief Financial Officer Abhijit Sen told PTI here today.

Last month, the Reserve Bank had upped all key rates by a quarter percentage point as part of its strategy to gradually withdraw from the easy money stance.

The April inflation data slated to be announced on Friday is crucial to decide the interest rate movement as the central bank has made it clear that it will not tolerate inflation progressing to double-digits.

Bank of Baroda Chief Economist Rupa Rege Nitsure said although the Greek crisis is unlikely to make any major impact on the country's economy, this may result in volatility in the domestic markets. "I feel that we may not get impacted immediately by the crisis. But it can create volatility in financial markets, which can generate misleading signals," Nitsure said, adding the monsoon, which is projected to be normal this year is also critical to the movement of interest rate in the economy.

The wholesale-price based inflation stood at 9.9 per cent in March and is expected to ease in April on the back of base-effect. The food price inflation eased to 16.04 per cent for the week ended April 24.

The weakness in the American Dollar and bullish equity market have helped the rupee to appreciate sharply today after being on a losing streak last week. The local currency touched an intra-day high of 44.82 against the greenback after nosediving last week.

Bond yields also moved up early in the day with the benchmark 6.35 per cent G-Sec maturing in 2020 saw its yield touching a high of 8.03 per cent during the day as against Friday's close of 7.99 per cent.