Reserve Bank Deputy Governor Michael D Patra on Friday said the Central Bank is defending the Rupee against volatility and will not allow “jerky movements”, though it is not looking at any particular level for the domestic currency against the US dollar.
Patra, who looks after the monetary policy department in the RBI, also stressed that the Indian currency has witnessed least depreciation in recent times.
“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.
“We are there in the market. We will not allow disorderly movements in the Rupee. We have no level in our mind, but we will not allow jerky movements. That’s for certain…let it be widely known that we are in the market defending the Rupee against volatility,” he said.
He was replying to a query on Rupee depreciation at an interactive session on ‘Geo-Political Spillovers and Indian Economy’ organised by industry chamber PHDCCI.
Patra further said if one looks at the depreciation of Rupee, it is one of the least in the world and that is the power of USD 600 billion dollar forex reserves.
The rupee on Friday slipped 1 paisa to close at its all-time low of 78.33 (provisional) against the US dollar.
At the interbank foreign exchange market, the local currency opened at 78.20 and finally settled at its all-time low of 78.33, down 1 paisa from its previous close.
During the day, the local unit witnessed an intra-day high of 78.19 and a low of 78.35 against the American currency.
To a question on Rupee-Ruble payment mechanism, Patra said the Reserve Bank will do whatever the government decides.
He said the government is seized of the matter.
Patra further said the decline in India’s current account deficit (CAD) to 1.5 per cent of GDP in the fourth quarter, from 2.6 per cent in the third quarter of 2021-22, augurs well for India’s external viability.
On an annual basis, therefore, the CAD turned out to be a modest 1.2 per cent 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, the deputy governor added.