The Reserve Bank of India (RBI) held interest rates in its first policy decision since the Middle East crisis erupted, as it grapples with a sharply weaker rupee while trying to support economic growth.

The central bank’s six-member Monetary Policy Committee (MPC) voted unanimously to keep the benchmark repurchase rate at 5.25%.

The decision reflects a wait-and-see approach as Iran-US tensions weigh on India’s energy supplies and growth outlook. The rupee’s slide since the start of the conflict has emerged as the RBI’s primary concern and drawn much of its focus in recent days.

Governor Sanjay Malhotra said that the MPC maintained its neutral stance to preserve the flexibility needed to respond effectively to emerging pressures. Malhotra projected growth of 6.9% in the current financial year — a more optimistic outlook than other economists. Inflation is projected at 4.6% for the period, which is within the RBI’s 2%-6% target range.

Before the RBI decision, India’s sovereign bond yields had slumped the most in four years as the ceasefire between the US and Iran boosted sentiment and led to a plunge in oil prices. The yields pared some losses after India held the rates. The rupee strengthened 0.5% against the dollar. The NSE Nifty 50 Index was trading 3.3% higher.

India, which relies on the Middle East for about half of its crude and most of its cooking gas, has been hit hard by the effective closure of the Strait of Hormuz. The rupee has tumbled around 7% over the past year, making it one of Asia’s worst-performing currencies. While the central bank has so far stepped in with aggressive measures to curb speculative bets against the currency, economists said a prolonged surge in energy prices could eventually force it to raise rates.

“Elevated inflation risks from oil and geopolitical tensions reduce the room for near-term easing, reinforcing a prolonged pause,” said Radhika Rao, economist at DBS Group Holdings. “Rate hikes would only come into consideration if second-round inflation effects begin to materialise more clearly.”

The RBI has reduced interest rates by a cumulative 125 basis points since February last year, including a quarter-point cut in December, as inflation stayed well below its target of 4%. Consumer price growth has stayed subdued so far this year, but could pick up if the Middle East conflict flares up again, as costlier energy imports feed into inflation.

Some economists have also cut growth forecasts to reflect India’s oil dependence. Goldman Sachs sees calendar-year growth at 5.9%, while Standard Chartered has lowered its forecast for the current financial year to 6.4%, with both having expected around 7% growth before the start of the Iran war.