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The Indian rupee drifted higher against the U.S. dollar in evening deals on Wednesday, after India's central bank kept its key benchmark rates unchanged, while slashing inflation forecast for the second half of this year.

The Monetary Policy Committee of the Reserve Bank of India maintained the repo rate at 6.50 percent. The reverse repo rate was retained at 6.25 percent. The decision was in line with economists' expectations.

The decision was consistent with the stance of calibrated tightening of monetary policy aimed to achieve the medium-term target for headline inflation of 4 percent on a durable basis.

The RBI projected inflation at 2.7-3.2 percent for the second half of the fiscal year 2019 and 3.8-4.2 percent for the first half of fiscal year 2020, "with risks tilted to the upside".

The rupee appreciated 0.6 percent to a session's high of 70.26 against the greenback, after falling to a weekly low of 70.66 in the morning session. The pair closed Tuesday's deals at 70.55. Next key resistance for the rupee is seen around the 68.00 level.