Reserve Bank of India’s Governor Shaktikanta Das Friday said that the Indian rupee is holding up well relative to both Advanced and Emerging Market Economies. This is because our underlying fundamentals are strong, resilient and intact.
He was speaking at the Bank of Baroda’s Annual Banking Conference in Mumbai. He said, the recovery is gradually strengthening. The current account deficit is modest. Inflation is stabilizing. The financial sector is well-capitalized and sound. The external debt to GDP ratio is declining while the foreign exchange reserves are adequate.
Mr. Das said that there is a genuine shortfall of supply of forex in the market relative to demand because of import and debt servicing requirements and portfolio outflows. The RBI has been supplying US dollars to the market to ensure that there is adequate forex liquidity. He assured that they will continue to engage with the forex market and ensure that the rupee finds its level in line with its fundamentals. He reiterated that the RBI has no particular level of the rupee in mind, but it would like to ensure its orderly evolution and has zero tolerance for volatile and bumpy movements.