NEW DELHI: Reserve Bank of India (RBI) governor Shaktikanta Das on Wednesday reiterated that the RBI has been striving to ensure that the rupee should be allowed to find its level.
Amid concern over the Indian rupee (INR) falling to new levels, the RBI governor said that the story of the rupee has been one of India’s resilience and stability and it is important to make an objective assessment of INR movement in the context of global and domestic macroeconomic and financial market developments.
He said that the appreciation of the US dollar this year has led to precipitated large-scale depreciation of all major global currencies including the Indian rupee (INR). Though he contended that through this episode of US dollar appreciation, the INR’s movements have been the least disruptive, relative to peers.
“In fact, the INR has appreciated against all other major currencies except a few. Cross-country comparisons of exchange rate movements are often made on an inflation-adjusted basis or what is called in real effective terms. On a financial year basis (i.e., from April 2022 to October 2022), the INR has appreciated by 3.2% in real terms, even as several major currencies have depreciated,” he said.
The rupee depreciated from 76 a dollar in April to 82.6 on 6 December 2022. Currency experts have said that despite RBI’s stand that the rupee should find its own level, it has time and again intervened in the market and sold dollars to support the local currency.
In the medium term, experts see the rupee trading in the 81.5-83 a dollar range.
Meanwhile, the RBI governor said that when the UD Fed stops its monetary tightening process, Capital flows to India will improve and external financing conditions will ease and the downside pressure on the rupee may also subside.