The Indian government is not averse to a weaker rupee in line with global market fundamentals, a senior Government official Says, at a time when the central bank’s intervention has tried to moderate the depreciation in the Indian currency.
The talks arise in the wake of the U.S. Federal Reserve’s aggressive rate hikes, which increased rates by 75 basis points over the overnight in an effort to combat inflation. The Fed’s decision caused the rupee to open at a record low of 80.28 and the dollar to reach a fresh 20-year high.
A Government official. “A weakening currency in line with market fundamentals is not a cause of concern to us.” authorities stated. The official continued, “It can assist cut imports and maintain export competitiveness, acting as a natural stabilizer for the economy.” The ministry of finance chose not to comment.
The Reserve Bank of India has started offloading dollars to lessen the strain the soaring dollar and outflows of foreign portfolio assets are putting on the rupee. To stop the rupee from going much lower than 80. The central bank sold a net amount of $19 billion from its reserves in just the month of July. The Reserve Bank of India’s forward dollar holdings have decreased from $64 billion in April to $22 billion, which is in addition to its spot market intervention.
On September 5, RBI Governor Shaktikanta Das stated that the organization’s goal has been to stabilise expectations in the face of the remarkable events that are continuously taking place throughout the world and allow the exchange rate to reflect the fundamentals rather than overshoot. – SHREEMETALPRICES