RBI to ensure rupee finds its appropriate level: Governor Shaktikanta Das

“We have no particular level of rupee in mind but we would like to ensure orderly evolution,” Das said at a banking conference in Mumbai organised by the Bank of Baroda. “We have zero tolerance for high volatility and bumpy movements.”

The rupee has depreciated around 8% since the beginning of this year and has been hitting new record lows against the US dollar since the past few sessions. The currency has crossed the 80 level on the back of monetary policy tightening and the consequent FPI outflows from capital markets. India’s widening trade gap and capital outflows have also raised the risks for the domestic currency.

Das said the rupee’s movements have been relatively smooth and orderly due to the RBI’s actions in the foreign exchange market. By ensuring there are no sudden and volatile shifts, the RBI was keeping expectations anchored and the foreign exchange market functioning in a stable and liquid manner, he added.

“We will continue to engage with the forex market and ensure that rupee finds its level in line with its fundamentals”. He said the central bank has been supplying dollars since there is a genuine shortage of dollars in the market.

Das also said the central bank has built its foreign exchange reserves for situations like these, noting that India has a substantial amount of foreign exchange reserves to handle the current crisis and there is no need to panic.

A report by Reuters suggested that the RBI was prepared to sell another $100 billion to defend the rupee from rapid falls. The RBI’s currency reserves have fallen by more than $60 billion from its peak of $642.450 billion in early September, in part due to valuation changes, but largely on the back of dollar selling intervention.

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