MUMBAI (Reuters) - The rupee strengthened and bonds gained after the Reserve Bank of Inia (RBI) raised the repo rate by 25 basis points as widely expected, while lowering short-term interest rates.
Some traders had been worried the RBI would raise interest rates more aggressively on Tuesday after saying on Monday it expects inflation to remain near the current elevated levels for the remainder of the fiscal year that ends in March.
The rupee rose to 61.52 per dollar from around 61.63 before the RBI decision.
The benchmark 10-year bond yield fell 6 basis points to 8.58 percent from levels before the decision, according to traders.
The 5-year overnight index swap fell 7 bps to 8.20 percent, while the 1-year OIS fell 9 bps to 8.36 percent.
Shares also gained, with the NSE banking sub-index up up 1 percent from being up around 0.3 percent before the RBI decision.
(Reporting by Mumbai markets team; Editing by Anupama Dwivedi)
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