Rupee sees lower volatility relative to peers: RBI Governor Shaktikanta Das
NEW DELHI: Even as the rupee exchange value fell significantly over the week, Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday said the local currency has witnessed “low volatility” and orderly movements as compared to its peers.
Speaking at an event in Mumbai, Das said, “On the exchange rate front, Indian rupee (INR) has exhibited low volatility and orderly movements relative to peers despite elevated US treasury yields and a strong US dollar,” Das said. He said this is due to the strength of the underlying macro-fundamentals of the economy and reassuring forex buffers. The dollar index and the US treasury yields have softened in the last three or four days.
The RBI governor said the central bank’s rate hikes, liquidity tightening moves and supply-side measures undertaken by the government cooled off the consumer price inflation to 4.9% in October. Softening in core inflation gives the RBI the conviction that ‘monetary policy seems to be working’. However, he expressed concerns over “overlapping and continuing shocks from food inflation”. The RBI’s monetary policy will be ‘watchful’ about the emerging trends and “actively disinflationary”, Das said.
Meanwhile, at the interbank foreign exchange market on Wednesday, rupee opened at 83.33 and touched a low of 83.34 against the greenback and settled at 83.32 against the dollar, registering a fall of 3 paise from its previous close. Rupee closed at an all-time low of 83.35 against the dollar on Monday.
As per forex traders, a muted trend in domestic equities weighed on the local currency while a correction in oil prices is positive for the currency. Rupee traded flat on Wednesday, however, dollar index is trading at 11 week’s low levels. Anuj Gupta, head of commodity and currency, HDFC Securities, said, “Subdued momentum seen in the rupee is due to no major activity. We are expecting it may appreciate. It has a support at 83 and resistance at 83.50 levels.”
In the same event, Das said the RBI’s tougher stance on unsecured loans earlier this month is a “preemptive” move in the interest of sustainability. Das advised lenders to be more cautious and spot any trend of risk building early, though the banking system continues to be resilient and there is no immediate cause of worry for the system.
Currency in focus
Softening in core inflation gives RBI conviction that ‘monetary policy seems to be working’, says Shaktikanta Das
Rs 83.35 all-time low, the currency closed against the dollar on Monday
Das says despite elevated US treasury yields and strong dollar, rupee remained resilient
RBI Guv expressed concerns over ‘overlapping and continuing shocks from food inflation’
RBI’s monetary policy will be ‘watchful’ about the emerging trends
Dollar index and the US treasury yields have softened in the last three or four days
Muted trend in domestic equities weighed on the local currency
Rs 83.34 the low local currency touched against the greenback on Wednesday and settled 4 paise lower at 83.32 against the US currency