RBI (Reserve Bank of India) sells US dollors to save the rupees from a sharp slide as investors fled for safety amide crisis in Europe.
RBI hike repo rate to eliminate to inflation accelerator it makes credit costly. According to C. Rangarajan there is no other option for RBI. Housing price raise upto 15 to 20 percent. Automobile and housing loan became costly.
According to Union Finance Minister Pranab Mukherjee RBI hike rate only to control the inflation.