Reserve Bank of India’s (RBI)
Governor Shaktikanta Das said on Wednesday that the appreciation of the US dollar that precipitated large-scale depreciation of all major currencies, including the Indian rupee (INR), had drawn wide attention. He said it was important to make an objective assessment of the movement of the rupee in the context of global and domestic macroeconomic developments and financial market conditions.
He said that through this episode of the US dollar appreciation, the rupee’s movements have been the least disruptive relative to the peers.
“The rupee has appreciated against all other major currencies except a few (barring the Swiss franc, the Canadian dollar, the Singapore dollar, the Russian ruble, etc.),” he said.
On a financial year basis, from April to October, the rupee has appreciated by 3.2 percent in real terms, even as several major currencies have depreciated.
"The story of INR has been one of India’s resilience and stability," Shaktikanta Das said.
He believes once the US Fed tightening is over, the tide will turn, capital flows to India will improve, and external financing conditions will ease.
“In this complex world with both push and pull factors at play, the INR - which is market-determined - should be allowed to find its level, and that is precisely what RBI is trying to achieve,” he said.
This was the fifth consecutive rate hike after a 40 basis points increase in May and 50 basis points hike each in June, August, and September. The RBI has raised the benchmark rate by 2.25 percent since May this year.
The Consumer Price Index (CPI) based inflation, which RBI factors in while fixing its benchmark rate, stood at 6.7 percent in October. Retail inflation has been ruling above the RBI's comfort level of 6 percent since January this year.
First Published: Dec 7, 2022 12:03 PM IST