The Reserve Bank of India (RBI) has not raised interest rates to fight off the recent global emerging market sell-off, but to tamp down inflationary pressures, the central bank's Governor Raghuram Rajan has said.
"I think for (some) time we have been saying very clearly we are focused on preserving the value of the rupee, in the domestic context," he told analysts on a conference call a day after the RBI unexpectedly raised its key rate by 25 basis points.
"Preserving it in the domestic context will preserve it in the international context. Preserving in the domestic context means bringing inflation under control. Once we do that, we believe investor confidence naturally follows," Rajan said.