India increases reserve ratio to dampen inflation

The Reserve Bank of India has hiked its cash reserve ratio from 7% to 7.5% in an effort to curb inflation. The revised ratio, which was announced as part of its mid-term review of annual policy for the 2007/08 financial year, will apply from 10 November.

The Reserve Bank also decided to keep interest rates unchanged, fearing that an increase would lead to further currency inflows.

"Domestic conditions are as expected, both in terms of growth and stability, supply and demand," said Y. V Reddy,

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