The RBI stated in its monthly bulletin that India aims to keep its currency stable to safeguard the economy from global risks.

They addressed criticism regarding its interventions in the foreign exchange market, stating these measures aim to prevent excessive rupee volatility.

To manage volatility, the RBI utilised its nearly $700 billion foreign exchange reserves, ensuring the rupee remains one of the least volatile currencies globally.

RBI officials noted that forex interventions averaged 1.6% of GDP from February to October 2022, slightly higher than the 1.5% during earlier crises but justified by the severity of current global challenges.

The central bank emphasised that interventions should be assessed relative to the economy’s size, countering claims of excessive market interference.

Governor Shaktikanta Das reiterated that India’s forex reserves are accumulated after meeting all financing needs, serving as a buffer for uncertain times.

The RBI stated that its exchange rate policy has not affected India’s trade competitiveness, as the focus has shifted to improving export quality and technology rather than relying on an undervalued exchange rate.

The Indian rupee has declined by only 1.5% against the dollar this year, making it the least impacted currency among Asian peers.

The RBI remains optimistic about the rupee’s medium-term outlook, expecting it to strengthen as global turbulence eases and India’s macroeconomic fundamentals assert their resilience.

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