The Reserve Bank of India RBI Governor Shaktikanta Das said that the Indian Rupee INR is a free floating currency and that its exchange rate is determined by the market. The Monetary Policy Committee MPC Rupee is a free floating currency and its exchange rate is market-determined, RBI doesn't have a fixed exchange rate in mind. Das said that the RBI intervenes to curb excess volatility and anchor expectations while unveiling the MPC announcements. The Governor stated that the banks' overarching focus is to maintain market confidence and macroeconomic stability.
According to Das, the movement of INR has been orderly compared to its Asian and emerging market economies EME counterparts as it depreciated by 7.4 per cent, while the US Dollar has appreciated by 14.5 per cent up to September 28 against a basket of major currencies. According to the RBI boss, this has resulted in a crisis in currency markets around the world.
He went on to elaborate on how the unarrested rise in the US Dollar impacted Indian forex reserves. 67 percent of the decline in reserves is due to valuation changes arising from the appreciating US Dollar and higher bond yields, according to Das. We are confident that we will meet our external financing requirements comfortably. The RBI Governor also highlighted a growth of $4.6 billion in foreign exchange reserves on balance of payments during the current financial year. He furthermore underlined India's other external indicators, viz. External debt to GDP ratio, net international investment position to GDP ratio, ratio of short-term debt to reserves and debt service ratio also indicate lower vulnerability as compared to most major EMEs. India's external debt to GDP ratio is the lowest among major EMEs. Talking about what steps the RBI can take in the coming days, he said that the central banks' actions will be guided by the data and evolving scenario and not a conventional or textbook approach to policy making. He said that our actions have helped in engendering investor confidence as reflected in the return of capital inflows since July. The anchor for exchange rate stability is the fact that our flexible inflation targeting FIT framework provides the anchor for price stability over the medium term. 90% of home and car loans are impacted by these loans.
There are 7% on upside risks to food prices.