RBI does not have fixed dollar: rupee exchange rate, says Governor
The Reserve Bank of India (RBI) does not have any does not have any fixed dollar: rupee exchange rate and its market interventions are to curb excessive volatility, said Governor Shaktikanta Das
The Reserve Bank of India (RBI) does not have any does not have any fixed dollar: rupee exchange rate and its market interventions are to curb excessive volatility, said Governor Shaktikanta Das.
He also said the aspect of adequacy of forex reserves is always kept in mind while RBI intervenes in the forex market. The umbrella continues to be strong.
Announcing the Monetary Policy statement on Friday Das said during the current financial year (up to September 28), the US dollar has appreciated by 14.5 per cent against a basket of major currencies.
This has caused turmoil in currency markets globally.
The Indian rupee movement has been orderly as compared to the currencies of most other nations, Das said.
He said the Indian rupee has depreciated by 7.4 per cent against the US dollar during the same period - faring much better than several reserve currencies as well as many of its emerging market economies and Asian peers.
Das said a stable exchange rate is a beacon of financial and overall macroeconomic stability and market confidence.
Citing the divergent views on the exchange rate of the rupee and the adequacy of our forex reserves Das said the rupee is a freely floating currency and its exchange rate is market determined.
"Second, the RBI does not have any fixed exchange rate in mind. It intervenes in the market to curb excessive volatility and anchor expectations. The overarching focus is on maintaining macroeconomic stability and market confidence," he said.
According to him, RBI's actions helped in engendering investor confidence as reflected in the return of capital inflows since July.
"Over the medium term, the primacy of price stability embedded in our flexible inflation targeting (FIT) framework provides the anchor for exchange rate stability," he remarked.
The RBI's interventions in the forex market are based on continuous assessment of the prevailing and evolving situation.
Das also announced an increase of repo rate by 50 basis points to 5.90 per cent.
Reacting to that Anindya Banerjee, Vice President, Currency Derivatives & Interest Rate Derivatives at Kotak Securities Ltd said: "All in all, a non-event for the USDINR market. We expect USDINR to trade within a range of 81.40 and 82.00 levels on spot."
RBI cuts growth forecast to 7 pc for current fiscal on global headwinds
The Reserve Bank of India on Friday cut the economic growth projection for the current financial year to 7 per cent from 7.2 per cent estimated earlier on account of extended geopolitical tensions and aggressive monetary policy tightening globally.
The headwinds from extended geopolitical tensions, tightening global financial conditions and possible decline in the external component of aggregate demand can pose downside risks to growth, RBI Governor Shaktikanta Das said.
The central bank in April had cut GDP growth estimate to 7.2 per cent from its earlier forecast of 7.8 per cent.
"Taking all these factors into consideration, real GDP growth for 2022-23 is projected at 7.0 per cent with Q2 at 6.3 per cent; Q3 at 4.6 per cent; and Q4:2022-23 at 4.6 per cent, with risks broadly balanced. The growth for Q1:2023-24 is projected at 7.2 per cent," he said.
Real GDP grew 13.5 per cent in the first quarter of FY'23, surpassing the pre-pandemic level by 3.8 per cent. This was led by robust growth in private consumption and investment demand.
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Published: 30 Sep 2022, 1:30 PM