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The Reserve Bank of India, on Friday, said the depreciation of the rupee has been moderate compared to several other emerging market economy (EME) peers, even as the rupee crashed below the 74 mark to the dollar on Friday.
“The exchange of the rupee has experienced bouts of volatility since the monetary policy committee (MPC) last met in August. In particular, India has not been immune to global spillovers from external sectors.
“The depreciation of the rupee has, however, in some respects, been moderate in comparison to several other EME peers,” said Urjit Patel, Governor, RBI.
He elaborated that by end-September, the rupee had depreciated in nominal effective terms by 5.6 per cent since March-end. In real effective terms, the rupee’s depreciation has been at 5 per cent.
“The RBI’s response to these unsettled conditions has been to ensure that the foreign exchange market remains liquid with no undue volatility. There is no target or band around any particular level of the exchange rate, which is determined by market forces of demand and supply,” said the governor.
Since the beginning of this calendar year, the rupee has weakened by 9.89 to the dollar.
On Friday, it breached the 74 to the dollar market (to an intra-day low of 74.23) due to the RBI not hiking the policy rate, rising oil prices, widening current account deficit, and foreign portfolio investors selling in the equity and debt markets.
It ended the day 18 paise weaker at 73.76 to the dollar.
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