The Reserve Bank of India (RBI) is committed to keeping the rupee stable and on an ongoing basis to protect the local currency against market volatility, Michael Patra, deputy governor, has said.
Addressing an event organized by the PHD Chamber of Commerce and Industry in the capital, Patra said there are signs that inflation is peaking in the pandemic-hit economy, which is fueled by global geopolitical turmoil, de-globalization and growth. is facing. Commodities and crude oil prices. He stressed that the central bank is keen to ensure that India does not fall into a state of “runaway inflation” and will try to “bottle the genie (inflation).
RBI will stand for stability of rupee: Deputy Governor Patra
Video Credits: Video: Kamal Narang
He had indicated that the RBI is most likely to face consumer price index-based inflation, which has been crossing the external limit of 6 per cent for three consecutive quarters, requiring the government to write a letter. Is. to violate. The RBI deputy governor expected that the monetary policy action required would be moderate compared to that being pursued by central banks globally. He also highlighted that the envisaged accountability for the central bank under the inflation targeting framework has enhanced the credibility of monetary policy.
The power of foreign exchange reserves of 600 billion dollars
Commenting on the stability of the rupee, Patra said that the devaluation of the rupee in recent months is the lowest in the world. “That is the power of 600”, said Patra, indicating India’s current foreign exchange reserves of about $600 billion.
“We don’t know where the money will be,” he said. We don’t even know where the dollar will be. Even the US Fed doesn’t know where the dollar will be. One thing is for sure – RBI will stand for the stability of the rupee. We are doing this on an ongoing basis even when I am speaking. We are there in the market. We will not allow haphazard fluctuations in the rupee. There is no level in our mind. But we will not allow jerky movements. It is widely known that we are hedging the rupee against market volatility. Let me tell you that we have no special level. What we want is a systematic movement”, Pant said.
Year of MSME
For RBI, the current year will be the year of MSMEs, Patra added to the excitement of the audience who were mostly representing MSMEs. He highlighted that the RBI was working to improve access and cost of credit to MSMEs. Patra also said that the RBI would urge large businesses and government departments to ensure that MSMEs are paid expeditiously in respect of their outstanding receipts.
PHDCCI members wanted Patra to explain where interest rates are headed and whether they should be prepared for another 100 basis points hike in policy rates in the coming months. Patra, however, brushed off the question, observing that it would not be correct to ask the central banker where the interest rates are going.
Published on
24 June 2022