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Indian rupee should be allowed to find its level - RBI's Das

12/07/2022 | 01:39am EST
A man counts Indian currency notes inside a shop in Mumbai

MUMBAI (Reuters) - The Indian rupee should be allowed to find its level and it was important to make an objective assessment of the moves on the currency, the Reserve Bank of India Governor Shaktikanta Das said on Wednesday.

"In this complex world, with both push and pull factors at play, the INR - which is market-determined - should be allowed to find its level and that is what we have been striving to ensure," Das said, while announcing the central bank's monetary policy decision to raise its key lending rate by 35 basis points (bps).

It was important to assess the rupee's movement in the context of global and domestic macroeconomic and financial market developments, Das said.

Das pointed out that during the recent appreciation in the U.S. dollar, the rupee's movements have been the "least disruptive," relative to peers.

The rupee has appreciated by 3.2 per cent in real terms so far this financial year - from April to October, Das said.

For the calendar year so far, the rupee is down about 11% against the dollar, broadly in line with other major Asian currencies such as the offshore Chinese yuan and the Korean won.

The RBI has been intermittently intervening in the foreign exchange market to keep the rupee's volatility in check. The currency dropped below 83 to the dollar to hit a record low in October. It has since recovered to 82.56.

The slide in the rupee was in part due to the dollar's rally against major and emerging market currencies on account of the U.S. Federal Reserve's aggressive rate hikes. This has impacted inflows into India and other emerging economies.

"It cannot be the case that their (the Fed's) monetary policy will be tightened endlessly. When the tightening is over, the tide will surely turn," Das said.

"Capital flows to India will improve and external financing conditions will ease."

The Fed's rate is expected to peak at around 5%. It is currently at 3.75%-4% and the U.S. central bank is widely expected to raise rates by 50 bps next week.

(Reporting by Nimesh Vora; Editing by Savio D'Souza)


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / INDIAN RUPEE (AUD/INR) 0.63% 57.311838 Delayed Quote.0.84%
AUSTRALIAN DOLLAR / US DOLLAR (AUD/USD) 0.43% 0.6918 Delayed Quote.1.54%
BANK OF INDIA LIMITED -0.82% 79.1 End-of-day quote.-10.32%
BRITISH POUND / US DOLLAR (GBP/USD) -0.22% 1.20024 Delayed Quote.-0.43%
CANADIAN DOLLAR / INDIAN RUPEE (CAD/INR) 0.14% 61.598 Delayed Quote.0.30%
CANADIAN DOLLAR / US DOLLAR (CAD/USD) 0.12% 0.74454 Delayed Quote.1.04%
EURO (B) VS INDIAN RUPEE SPOT (EUR/INR) -0.17% 88.602 Delayed Quote.0.20%
EURO / US DOLLAR (EUR/USD) -0.18% 1.0708 Delayed Quote.0.81%
INDIAN RUPEE / US DOLLAR (INR/USD) -0.01% 0.012086 Delayed Quote.0.62%
NEW ZEALAND DOLLAR / US DOLLAR (NZD/USD) -0.02% 0.6306 Delayed Quote.-0.36%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) -0.05% 6.79632 Delayed Quote.-1.75%
US DOLLAR / INDIAN RUPEE (USD/INR) 0.02% 82.7275 Delayed Quote.-0.62%
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