Reserve Bank of India (RBI) Governor Shaktikanta Das on Friday said the central bank has zero tolerance for volatile and bumpy movements in the rupee, days after the domestic currency breached the 80-level against the dollar. He said the central bank actions have helped in smoother movement of the currency.
The governor was speaking at a banking conclave organised by the Bank of Baroda on Friday.
Das in his address mentioned that the RBI will continue to engage with the foreign exchange (Forex) market to ensure the rupee finds its level, while adding, he said the central bank has built its foreign exchange reserves for a situation like the present and has adequate levels of reserves to handle the current crisis.
On rupee depreciation, he said the Indian currency is holding up relatively well when compared to the currencies of emerging market peers and advanced economies.
The RBI has no specific level on the rupee in mind and since there is a genuine shortage of dollars in the market, the central bank has been supplying dollars.
The central bank has been supplying US dollars to the market to ensure adequate supply of liquidity to the market and also clarified that the central bank does not target a particular level for the currency, said Das.
He pointed out 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, the governor said.
According to Das, 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.