Macquarie keeps its 3-month rupee target at 56

The investment bank says the RBI statement seems less dovish relative to February's policy

Macquarie says INR takes a 'double blow' from a marginally less dovish RBI and negative political development which should take the wind off the government's reform sail, but adds developments are not a 'knock out'.

The investment bank maintains a modestly negative view on INR, keeping its 3-month USD/INR target at 56 for now.

It says the RBI statement seems less dovish relative to February policy, though it does not rule out a rate cut.

"While this does not rule out another cut in rates, the room for further cuts seems limited to at most one 25bps move at the May 3 meeting. This takes away one support for the INR," Macquarie says.

The Congress Party's reform move seems at a real risk of stalling with the withdrawal of a key ally, the report says.

USD/INR at 54.25/26, off three-week lows of 53.9050, 54.1650/1750 on Monday.