RBI Governor Shaktikanta Das on Monday said that market development is ultimately a shared goal of the regulator and the market participants. "The RBI has taken steps towards liberalising markets of providing liquidity, contributing to price determination and easing operational constraints. It is upon the market participants to take the baton forward to develop the market and offer innovative financial products to a broader set of clients," he said.
The RBI will remain constantly engaged with market bodies and participants, bodies such as FIMMDA in particular, he said, adding, "Together, we should remain future-ready at all times. I firmly believe that we can do this," he said.
Das was speaking at the Fixed Income Money Market and Derivatives Association of India's (FIMMDA) annual event on Monday.
He also said that going forward, India's monetary policy would remain nimble-footed, watchful and calibrated.
"The RBI remains committed to support the market with two-way
operations, as warranted, in line with the revised liquidity management
framework. The RBI will also strive to ensure stable money market
conditions, the smooth conduct of the primary auctions in G-secs and
facilitate the orderly evolution of the yield curve," the RBI Governor said.
RBI Governor Shaktikanta Das said that the Indian rupee has moved in an orderly manner in the present financial year, so far.
"It has held its own in a world of sharp depreciation across other EME and AE currencies. While the US dollar has appreciated by 11.8 percent during the current financial year so far, the Indian rupee has depreciated by 5.1 percent, which is among the lowest in the world," he said, adding that the RBI is in the market on a regular basis, providing liquidity and confidence so as to facilitate its smooth and normal functioning.
He said the US Fed commentary at the recently-held Jackson Hole on the future trajectory of US monetary policy, has infused substantial volatility in global financial markets. "This episode is yet another demonstration of the point recently made by me that forward guidance can be a useful policy instrument in an accommodated monetary policy phase or cycle, it can be quite difficult to provide such forward guidance in a coherrent and consistent manner, especially when we are in a tightening cycle. The difficult gets further compounded in the current environment of extremely high uncertainty," he said.
He added that such forward guidance may even have destabilisting effects on financial markets especially if the subsequent policies are in variance with the earlier pronouncements. "Especially in time when global tensions and synchronised monetary tightening policy come together, overshooting presents subsequent re-alignment with the underlying fundamentals. So there are expectations built up and markets tend to overshoot, and subsequently when the central bank policy actions are different or when there is a greater realisation of actual state or macroeconomic fundamentals, then of course the correction takes place. So overshooting often happens in such difficult and complex times," he said.
First Published: Sept 5, 2022 8:47 PM IST
