Rupee moved in 'relatively orderly fashion': RBI governor on currency's decline against dollar

Reserve Bank of India (RBI) governor Shaktikanta Das on Friday said that the domestic currency moved in a relatively orderly fashion and depreciated 4.7 per cent against the US dollar in the current financial year. The rupee's depreciation was "more on account of the appreciation of US dollar rather than weakness in macroeconomic fundamentals of the Indian economy," the central bank chief mentioned.

"During the current financial year (up to August 4), the US dollar index (DXY) has appreciated by 8.0 per cent against a basket of major currencies. In this milieu, the Indian Rupee has moved in a relatively orderly fashion depreciating by 4.7 per cent against the US dollar during the same period – faring much better than several reserve currencies as well as many of its EME and Asian peers," he stated.

The RBI governor also said that market interventions by the central bank have helped in containing volatility and ensuring the orderly movement of the rupee.

On the future course of action, Das said, "We remain watchful and focused on maintaining stability of the Indian rupee."

Meanwhile, the rupee extended gains today after the Reserve Bank hiked the country's key policy repo rate by 50 basis points to 5.40 per cent, marking a third straight increase that took the key lending rate above the pre-pandemic level.

The rate hike comes on the heels of stubbornly high inflation, which stayed above RBI's upper tolerance limit of 6 per cent for the sixth straight month in July.

The partially convertible rupee was trading at 78.99 per dollar, compared to 79.16 before the policy decision. The local unit had closed at 79.4650 in the previous session.

Further, the benchmark 10-year bond yield climbed after the RBI decided to hike rates and was at 7.2317 per cent. Earlier today, it declined to 7.1073 per cent after ending at 7.1516 per cent on Thursday.

(With inputs from Reuters)