India hikes interest rates to curb rising inflation

MUMBAI, (AFP) - India’s central bank on Tuesday raised benchmark interest rates by 25 basis points, its sixth hike since the start of the year to curb rising inflation in the country’s booming economy.

The Reserve Bank of India (RBI) raised its main repo rate -- the rate at which it lends to commercial banks -- to 6.25 percent. The reverse repo rate -- the rate it pays to banks for deposits -- was increased to 5.25 percent.

The hikes were broadly in line with expectations and came after Finance Minister Pranab Mukherjee on Monday said the continued rise in the cost of living was a “matter of concern”.

But the bank said it expected to hit the pause button on further rises.

“Based purely on current growth and inflation trends, the Reserve Bank believes that the likelihood of further rate actions in the immediate future is relatively low,” the bank said in a statement.

India has been aggressive in raising interest rates in Asia’s third-largest economy to check inflation as the country’s economy surges.

Overall inflation was in double figures earlier this year but has dropped to 8.62 percent. Food price inflation though is still a worry and is running at 13.75 percent, despite good monsoon rains.

Headline inflation is still higher than the bank’s comfort zone of five to six percent. Government estimates predict that inflation will fall to about five to six percent by the end of the financial year in March 2011.

New Delhi is keen to dampen inflation while not hurting economic growth, which is predicted to hit 8.5 percent in the current financial year and 9.0 percent in the following year.

Data this week showed manufacturing grew faster in October than in the previous month, although the cost of raw materials has risen markedly.

Policymakers say while food price rises remain a concern, inflation has also spread to other parts of the economy, such as commodities, fuel and metals.

India tops UAE’s import list in 2010

DUBAI: India has topped Dubai imports list with 45 billion dirhams by 19 per cent of the aggregate value, statistics revealed by Dubai Customs for the first eight months of 2010 have shown.

China came in second with 29 billion dirhams at 12 per cent, followed by the US which contributed eight per cent to the total imports with a value of 18.7 billion dirhams.

Germany and Japan scored 12 billion dirhams and 11 billion dirhams of imports values, respectively.

Dubai’s non-oil trade continued to grow, as it reached 377 billion dirhams with growth of 18 per cent at the end of August 2010, as compared to 320 billion dirhams during the same period last year.

Customs and Free Zone Corporation and Dubai Customs Director General and Executive Chairman of Ports Ahmed Butti Ahmed said there are a number of factors which contributed to this rise in Dubai international trade exchange, with the huge logistic services the emirate provides and its advanced infrastructure.

Ahmed Butti stated that Dubai direct exports grew the the most at 39 per cent in the last five years exceeding 44 billion dirhams by the end of August 2010.