As India's currency plunges to a record low this month, the central bank is expected to increase its policy rate for the third time in a row.

As per a Bloomberg report, 24 of 35 economists expect the Reserve Bank of India's monetary policy committee to raise its repurchase rate by 50 basis points to 5.9%. According to ten economists, the rate will rise by 35 basis points to 5.75%.

During the August meeting, RBI Governor Shaktikanta Das, pledged to take all necessary measures to cool inflation, which has remained above 6% this year, but his tone may increase to hawkish on Friday.

The RBI will probably revise its oil price assumption from $105 to $80 on Friday due to the drop in oil prices from nearly $120 in June. With food grain prices on the rise, the forecast for economic growth is unlikely to change significantly.

Despite the RBI mounting a vigorous currency defense in the past year, the rupee is down about 10% this year and trading near a record low, with some of the fall being attributed to revaluation.

As the financial system tightens, bond traders are watching the central bank's plans for managing liquidity.

In addition to RBI intervention in the forex market, increased domestic activity following a reopening of virus restrictions has contributed to the shortage of rupees.

On Wednesday, Indian government bond yields rose after the 10-year yield hit 4% for the first time since April 2010, fueling nerves over high policy rates.

The benchmark Indian 10-year government bond yield was at 7.336% as of 1419 GMT