Significant portion of our banks funding comes from external sources, if dollar falls, it becomes extremly difficult to sell our bonds in wholesale market (who would want to buy bonds of a currency which keeps falling)
It will end carry trade another source of external funding.
and falling dollar will increase cost of our imports and hence inflation.
Lower interest rate is a temp mechanism to support a voilent fall in economy, US can keep lower rate and get away becoz they have reserve currency we dont.
