RELATIVE STABILITY IN INDIAN RUPEE DURING RECENT PERIOD -AN OUTCOME OF STRENGTH OF THE INDIAN ECONOMY, SAYS RBI GOVERNOR AT DAVOS WEF 2024

Published on Jan 19, 2024 11:13

The Reserve Bank of India Governor, Shaktikanta Das, in his address at the annual World Economic Forum (WEF) in Davos, Switzerland stated that the Indian rupee is a freely floating currency and its exchange rate is market determined. Its relative stability in the recent period is an outcome of the strength of the Indian economy, its macroeconomic fundamentals and improvements in India�s external position, particularly the significant moderation in the current account deficit (CAD) and revival of capital flows on the back of comfortable foreign exchange reserves. Labelling the Indian rupee in any other manner by cherry-picking time periods for analysis is not appropriate and grossly inconsistent with reality, he added. A key component of financial stability is to have a currency that is stable and appreciates or depreciates in an orderly manner, RBI governor noted. Various stakeholders in the economy including businesses, investors and, above all, the people stand to benefit from a stable currency. Excessive volatility has to be checked through market intervention by the central bank, more so in an emerging market economy (EME). He further stated that as a step towards greater digitalisation, the pilot for our Central Bank Digital Currency (CBDC), e-Rupee, was launched in both wholesale and retail segments in November-December, 2022. Since then, 4 million customers have been onboarded. The CBDC will enhance digital transactions, especially in areas with limited internet connectivity. RBI expects CBDC (e-Rupee) to become a global trendsetter and facilitate seamless cross-border payments.