Won't allow jerky movements of rupee, says RBI Deputy Governor

Tribune News Service

New Delhi, June 24

RBI Deputy Governor Michael D Patra on Friday said the central bank will actively intervene in the market to prevent “jerky movements” of the rupee due to the current volatility in international forex markets.

Speaking at an event organised by the PHD Chamber, Patra said, “We are there in the market; we will not allow disorderly movements in the rupee. We have no level in mind, but we will not allow jerky movements.” The RBI intervenes in the forex market by selling dollars and buying rupees to prevent one-way moves in the domestic currency. RBI’s foreign exchange reserves have slipped below the $600-billion mark but are healthy at $596.46 billion as on June 10.

Not targeting any level

We don’t know where the rupee will be. Even the US Fed doesn’t know where the dollar will be. But be sure of one thing. We will stand for its (rupee) stability, and we’re doing it on an ongoing basis even as I speak. —Michael D Patra, RBI Deputy Governor

The rupee has steadily depreciated against the US dollar and closed at an all-time low of 78.32 against the greenback on Thursday, down by 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 amount of depreciation of the rupee is among the lowest in the world. On Friday, the rupee slipped by one paisa to close at its all-time low of 78.33 against the dollar.

“We don’t know where the rupee will be. Even the US Fed doesn’t know where the dollar will be. But be sure of one thing. We will stand for its stability, and we’re doing it on an ongoing basis even as I speak,” said Patra while speaking during a session on ‘Geo-Political Spillovers and Indian Economy’.

The decline in current account deficit (CAD) to 1.5% of GDP in the fourth quarter, from 2.6% in the third quarter of 2021-22, augurs well for India’s external viability. On an annual basis, CAD turned out to be a modest 1.2% of GDP in 2021-22, with the intrinsic strength of India’s foreign exchange earnings mitigating the terms of trade shocks imposed by geopolitical spillovers and the surge in import demand, he observed.

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