Rupee holding up relatively well, RBI actions have helped, says central bank Governor
Reserve Bank Governor Shaktikanta Das said on Friday that the rupee is holding up relatively well when compared to the currencies of emerging market peers and advanced economies.
Days after the domestic currency breached the 80-level against the dollar, Das said the Reserve Bank of India (RBI) has zero tolerance for volatile and bumpy movement in the rupee and added that the central bank actions have helped in smoother movement.
He said RBI has been supplying US dollars to the market to ensure adequate supply of liquidity and also clarified that the central bank does not target a particular level for the currency.
Further, Das said there was no need to be alarmed by unhedged exposures on foreign borrowings. "Bulk of such exposures are by state-owned companies and the government can pitch-in with help if need be," he added.
According to him, the inflation targeting framework has worked well since adopting it in 2016 and stressed that the same should continue in the interest of the economy and the financial sector. "We should not shift the goal posts to suit the immediate requirements," Das said.
Speaking at an event organised by Bank of Baroda, he also said that imported inflation is a challenge because India is a key importer of commodities.
The Governor, who heads the six-member monetary policy committee, said we are still in the mode of withdrawal of accommodation and referred to the repo rate being under the pre-COVID levels even after the two consecutive hikes.
Das also urged banks to maintain their key ratios like on capital buffers above the mandated levels, pointing out that such a practice will be looked at as a sign of good governance.
Going ahead, he said the world of banking is going to be competitive and collaborative.
The RBI chief said that it will very soon come out with regulations on the issue of digital lending which will take into account the concerns around excesses by some players and also ensure that innovation is not impacted.
The credit growth in the economy has touched 14 per cent, Das said.