New Delhi, June 24
RBI Deputy Governor Michael D Patra on Friday said the central bank will actively intervene in the market to check the rupee’s “jumpy move” due to the current volatility in the international foreign exchange markets.
Speaking at an event organized by PHD Chamber, Patra said, “We are in the market; We will not allow haphazard fluctuations in the rupee. We have no level in mind, but we will not allow jerky movements. To prevent unilateral movement in the domestic currency, RBI intervenes in the foreign exchange market by selling dollars and buying rupees. RBI’s forex reserves have slipped below $600 billion, but are healthy at $596.46 billion as of June 10.
not targeting any level
We do not know where the rupee will be. Even the US Fed doesn’t know where the dollar will be. But keep one thing in mind. We will stand for its (Rs) stability, and we are doing it on an ongoing basis, as I speak. —Michael D Patra, Deputy Governor of RBI
The rupee has depreciated continuously against the US dollar and closed at an all-time low of 78.32 against the greenback on Thursday, down 5% in the first six months of the current calendar year. But Patra, who looks after the monetary policy department in the RBI, said the rupee’s depreciation is among the lowest in the world. On Friday, the rupee had closed at its all-time low of 78.33 against the dollar, down by a paise.
“We don’t know where the money will be,” he said. Even the US Fed doesn’t know where the dollar will be. But keep one thing in mind. We will stand for its sustainability, and we are doing it on an ongoing basis, as I speak,” said Patra, speaking during a session on ‘Geopolitical Spillover and the Indian Economy’.
The fall in the current account deficit (CAD) to 1.5% of GDP in the fourth quarter, from 2.6% in the third quarter of 2021-22, bodes well for India’s external viability. On an annual basis, the CAD turned out to be a modest 1.2% of GDP in 2021-22, with the internal strength of India’s foreign exchange earnings bucking trade shocks imposed by geopolitical spillovers and growth in import demand, they observed.