India also needs to keep rates high enough to attract foreign capital and offset the current account deficit, in order to keep the rupee from weakening and making inflation worse.

WSJ: India Central Bank Cuts Lending Rate

India also needs to keep rates high enough to attract foreign capital and offset the current-account deficit, in order to keep the rupee from weakening and making inflation worse.

WSJ: India Central Bank Cuts Lending Rate

In economics it is axiomatic that positive and negative current account balances will ultimately be offset by changes in relative currency valuations.

FORBES: Germany And China Have The Gold And Will Make The Rules