The official said that despite several quarters of the view that the RBI’s foreign exchange policy has not changed under new governor Sanjay Malhotra, the Reserve Bank of India (RBI) will not actively defend the rupee.
The Indian rupee has weakened about 3.5% of the dollar in the past six months, weakening 86.88 on March 7 Bloomberg. By comparison, the Chinese yuan and the Japanese yen weakened by 1.7% and 0.7% respectively during this period.
The official told Mintspeaking anonymously. The official said the government and the Reserve Bank of India hope that the rupee will eventually rise to December levels and India’s foreign exchange reserves are enough to defend it.
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According to the Reserve Bank of India, the rupee averaged $84.99 in December at US$86.27.
Inquiries sent by email to the RBI and the Ministry of Finance have not been answered yet.
Initially, Malhotra would devalue the currency and make it more competitive. However, Mint It was learned that the Reserve Bank of India has decided to continue defending the currency and adhere to its position to curb unlimited volatility.
but Mint Reported on January 16. During this period, the rupee was so stable that the IMF reclassified India’s exchange rate regime as a “stable arrangement” of “floating” in December 2023.
According to the latest Reserve Bank of India data, India’s foreign exchange reserves also fell by $7.7 billion from $638.7 billion from February 28 to February 28. Since early December, kittens have shrunk by $16.2 billion.
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Although India’s foreign currency buffers have doubled in the past 10 years, these are volatile capital flows. As former RBI Lieutenant Governor BP Kanungo said in his 2019 speech: “People also need to remember that India’s foreign exchange reserves are borrowed reserves, not built from export surpluses.”
Foreign portfolio investors (FPI) sold $15.9 billion worth of Indian shares from March 7 to March 7 this year, according to National Securities Storage Co., Ltd. (NSDL). In 2024, FPI is the net buyer of US$124 million in domestic stocks.
Government officials quoted earlier said that while the Reserve Bank of India’s efforts were intended to curb volatility, the efforts were offset by a large number of foreign outflows. The official said the rupee would put pressure on the rupee as the dollar is expected to strengthen, and the currency would take time to reach the required level.
However, the past week is better. news agency Reuters The Indian rupee has the highest weekly earnings in two years as the dollar dropped sharply in shares of major peers, which also helped to cancel regional peers for local units, reported Friday.
However, experts believe that the rupee will depreciate given the external environment.
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“The only thing RBI has to try is to smooth the slide and volatility,” said Dhiraj Nim, an economist at ANZ Banking Group.
U.S. President Donald Trump recently announced plans to impose reciprocity tariffs on certain trading countries starting in April, thus imposing the same rates as U.S. products.
According to NIM, any active defense against Rs is unlikely to be fruitful in the current situation and is therefore not recommended. “That’s because spot reserves are lower than our past reserves, but the reserves that the forward Indiana State University (RBI) has been using to defend this currency have also fallen into huge negative positions. If the global environment is necessary and tariffs are met, the RBI should weaken the rupee.”
Others say that in the past few months, the Rupee has been stable as stable as the PEG currency for two years, and the Rupee has begun to weaken against the dollar, meaning the central bank has weakened it. “Forex reserve levels also show that the Reserve Bank of India has adopted a method to lower the currency primarily to market forces. Ruby said the rupee depreciated by nearly 5%, a move that always attracts new players and attracts opportunities that once had for those bears of bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish bearish.
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