RBI governor Shaktikanta Das on Wednesday appealed to all to look at currency depreciation sans emotions, asserting that the rupee has behaved orderly since the current geopolitical crisis.
In remarks that came amid a heated debate on the steady depreciation of the rupee which results in imported inflation, Das said the rupee has depreciated less when compared with other major currencies, and in fact appreciated against other currencies beyond the U.S. dollar.
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"Talk of unidirectional downward descent and the RBI's defense are dominating the narrative in the public space. It is, therefore, important to address the issue free of emotions and fully loaded with nothing but facts," Das said speaking at the annual FIBAC conference of bankers here.
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"The rupee has seen a very orderly movement since the onset of the current geopolitical crisis. We must deal with the global hurricane with confidence, endurance and the courage of our conviction that we will weather this turmoil," he added.
On a financial year basis, almost all major currencies—barring a few like the Swiss franc, the Singapore dollar, the Russian ruble and the Indonesian rupiah—have depreciated against the U.S. dollar by more than the rupee, he said.
The rupee appreciated against all other major currencies barring of course the U.S. dollar, and a few other currencies, he added.
The rupee has appreciated by 12.4% against the Japanese Yen, 5.9% against the Chinese Yuan, 4.6% against the Pound Sterling and 2.5% against the Euro, he said.
"The story of currency movements following the war in Ukraine is more about India's resilience and stability in the face of the unrelenting strengthening of the U.S. dollar rather than a story of weakness," Das said.
He said rupee's share in global trade is linked to the overall economic growth and especially exports.
An assessment of India's innate strengths can be gauged from a comparison of the state of the economy today after three years of multiple shocks, with the situation during the taper tantrum in 2013 when India was labelled as among the 'fragile five' countries, he said.
The governor said the present period of liquidity strain is likely to be transitory as the leakage due to currency demand will slow down after the festival season, pick up in government expenditure after the monsoons, and as the pace of forex outflows moderates.
"The Reserve Bank remains agile and watchful, continuously monitoring the liquidity situation and is ready to undertake liquidity operations on either side so that overall liquidity remains adequate to meet the requirements of the productive sectors of the economy," he said.
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