Reserve Bank Governor Shaktikanta Das on Wednesday said the rupee’s movements have been least disruptive to its counterparts in view of the strengthening US dollar and comfortable size of foreign exchange reserves. On a fiscal year basis (April to October 2022), the rupee has appreciated by 3.2 per cent in real terms, even as several major currencies depreciated, he said while announcing the latest set of bi-monthly monetary policy. Where did you go?
“The story of the rupee has been one of India’s resilience and stability,” the governor said, adding that the appreciation of the US dollar this year has attracted massive depreciation of all major global currencies, including the Indian rupee. extensive attention.
Das also emphasized that it is important to make an objective assessment of rupee movements in the context of global and domestic macroeconomic and financial market developments. “Through this episode of US dollar appreciation, the rupee’s movements relative to its counterparts have been the least disruptive,” the governor said.
He further said that what the terminal interest rate for the US Fed will be is anyone’s guess, but it cannot be that their monetary policy will tighten endlessly. When the austerity is over, Das said the tide will definitely turn and capital will flow in. India There will be reforms which will ease the situation of external funding.
“In this complex world with both push and pull factors, the rupee – which is market-determined – should be allowed to find its footing and that is what we are trying to ensure. We must tackle the current global storm with confidence and endurance,” the governor said.
He also said that the size of foreign exchange reserves is comfortable and has also increased. It has increased from USD 524.5 billion on October 21, 2022 to USD 561.2 billion by December 2, 2022, covering almost nine months of projected imports for 2022-23.
Furthermore, India’s external debt ratio is low by international standards. Noting that at a time when the slowdown in global demand is putting pressure on India’s merchandise exports, Das said the country’s service exports remain strong and remittances are touching new heights. The net balance under services and remittances remains in large surplus, which partly offset the trade deficit.
Consequently, even though the current account deficit is higher than in 2021-22, it is largely manageable and within the parameters of viability, the governor said. Net foreign direct investment (FDI) inflows remain strong and increased to $22.7 billion during April-October 2022 from $21.3 billion in the same period last year.
Foreign portfolio inflows have resumed in recent months and were positive at $11.8 billion during July to December 5, 2022, led by equity inflows.
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