Home / Economy / Exchange rate policy seeks to prevent excessive  volatility:  Das

MUMBAI : The Reserve Bank of India’s monetary policy will “remain watchful, nimble-footed and calibrated", RBI governor Shaktikanta Das said on Monday.

“RBI remains committed to supporting the market with two-way operations, as warranted, in line with the revised liquidity management framework. RBI will also strive to ensure stable money market conditions, the smooth conduct of the primary auctions in G-secs and facilitate the orderly evolution of the yield curve," he said.

Das also made it clear that RBI is in the market on a day-to-day basis, and the RBI’s exchange rate policy is aimed at preventing excessive volatility of the Indian rupee and anchoring expectations around the depreciation of the rupee. The Indian currency has moved in an “orderly" fashion against the dollar so far in this financial year and is reflecting global and domestic fundamentals, he added. Das was speaking at a function organized by the Fixed Income Money Market And Derivatives Association of India.

“Our endeavour amid the extraordinary events unfolding globally on an ongoing basis has been to anchor expectations and allow the exchange rate to reflect the fundamentals rather than overshoot. Avoiding undue and excessive volatility is a desirable policy objective for all stakeholders while reaping the benefits of a market-determined exchange rate regime," he said.

Das also added that with the consequent easing of imported inflation pressures, India’s CPI inflation peaked in April. Retail inflation fell to a five-month low of 6.71% in July from 7% in June. That said, inflation continues to be above its medium-term target of 4% and the central bank’s 2-6% tolerance range.

“While the incoming monthly inflation prints in the near-term could be bumpy, we expect it to moderate in the second half of 2022-23, and then move within the tolerance band in Q4 and then even lower in Q1 2023-24," he added.

Das also said that the delivery of services under the RBI Retail Direct scheme, where retail customers can buy government securities, needs to improve. He added that market participants need to work towards enhancing liquidity for retail investors on the NDS-OM platform.

Das also said that services provided by banks on the FXRetail platform need special attention.“We continue to get representations from customers—particularly those undertaking forex transactions with small ticket sizes—about fair pricing of forex products," he added.

ABOUT THE AUTHOR

Gopika Gopakumar

Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
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