Tide will turn for rupee after Fed tightening is over: RBI Guv Shaktikanta Das

“The terminal interest rate for the US Fed is anybody’s guess, but it cannot be the case that their monetary policy will be tightened endlessly. When the tightening is over, the tide will surely turn. Capital flows to India will improve, and external financing conditions will ease,” Das said, while at the end of the 3-day meeting of the central bank’s monetary policy committee.

He also pointed out that through this episode of US dollar appreciation, rupee movements have been the least disruptive relative to peers.

“In fact, the INR has appreciated against all other major currencies except a few. Cross-country comparisons of exchange rate movements are often made on an inflation-adjusted basis or in real effective terms. On a financial year basis (i.e., from April 2022 to October 2022), the INR has appreciated by 3.2 per cent in real terms, even as several major currencies have depreciated. The story of the INR has been one of India’s resilience and stability,” Das said.

In this complex world with both push and pull factors at play, the rate of the Indian rupee, which is market-determined, should be allowed to find its level, and that is what we have been striving to ensure, he said while asking investors to make an objective assessment of the movement of the INR in the context of global and domestic macroeconomic and financial market developments.

Trading around 82.5 against the American currency today, the rupee touched a lifetime record high of 83.29 in October this year.