Amid concerns over Rupee depreciation and forex reserves, RBI Governor Shaktikanta Das on Saturday elaborated about the current situation and the objectives of the central bank’s intervention at the 20th edition of the Hindustan Times Leadership Summit. “The first objective of our market intervention in the forex market is to ensure an orderly movement of the exchange rate. The second is to anchor market expectations. If the RBI doesn’t intervene, market takes it as Rupee will just depreciate and RBI is indifferent and agnostic to it. That will fuel further depreciation,” he explained.
“Thirdly, is to maintain financial stability which requires the stability of the exchange rate system,” he further added, and assured, “even at this points of time, our reserves are very comfortable”.
On Friday, the Rupee appreciated by 62 paise to close at 80.78 against the US dollar, news agency PTI reported, as moderation of the US inflation data coupled with a fall in the dollar index boosted investor sentiments. In another report, the news agency had quoted the central bank as saying that India’s foreign exchange reserves dropped by USD 1.087 billion to stand at USD 529.994 billion for the week ending November 4 on a sharp decline in the gold reserves.
The decline in reserves come amid global developments, including the Ukraine war. In October 2021, the country’s forex kitty had reached an all-time high of USD 645 billion, the report by PTI highlighted.
Meanwhile, the RBI Governor – speaking at the HTLS 2022 – further stressed that “close coordination between monetary authorities and the government authorities does not mean a compromise”. The country’s economy remains resilient, he stressed.