Rupee holding up well relative to emerging market peers, advanced economies: RBI Governor

https://ift.tt/NK83Hd1

Mumbai, July 22

Reserve Bank Governor Shaktikanta Das on Friday said the rupee is holding up relatively well when compared to the currencies of emerging market peers and advanced economies.

Days after the domestic currency breached the 80-level against the dollar, Das said the Reserve Bank of India (RBI) had zero tolerance for volatile and bumpy movement in the rupee and added that the central bank actions had helped in smoother movement.

He said the RBI had been supplying US dollars to the market to ensure adequate supply of liquidity and also clarified that the central bank did not target a particular level for the currency.

Das said there was no need to be alarmed by un-hedged exposures on foreign borrowings. Bulk of such exposures are by state-owned companies and the government could pitch in with help if need be, he added.

According to him, the inflation targeting framework has worked well since adopting it in 2016 and stressed that the same should continue in the interest of the economy and the financial sector.

"We should not shift the goal posts to suit the immediate requirements," Das said.

Speaking at an event organised by Bank of Baroda, he said imported inflation is a challenge because India is a key importer of commodities.

The Governor, who heads the six-member monetary policy committee, said we are still in the mode of withdrawal of accommodation and referred to the repo rate being under the pre-covid levels even after the two consecutive hikes.

Meanwhile, Das also urged banks to maintain their key ratios like on capital buffers above the mandated levels, pointing out that such a practice would be looked at as a sign of good governance.

The Tribune