With India's currency in recent steep decline against the U.S. dollar, the Reserve Bank of India kept its repurchase rate at 7.25%, fearing that any move lower would stoke inflation. India already has the second-highest inflation rate in the Group of 20 nations, and analysts said the move should help stem an outflow of foreign funds. "Rupee stability is a crucial precondition to even begin considering policy easing. You can't rein in prices and deficits in the absence of currency stability," said economist Vishnu Varathan of Mizuho Corporate Bank in Singapore.

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