3 weeks ago
RBI upbeat on rupee as West Asia tensions ease
The rupee is the money people use in India.
The Reserve Bank of India (RBI) is the country's central bank, like the manager of its money.
The RBI thinks the rupee will become more valuable compared to the US dollar.
That could happen because tensions in West Asia are easing, which makes markets calmer.
The rupee already got stronger, moving from 96.90 to 95.08 for one dollar.
The RBI says it will let the market decide the rupee's value, stepping in only if things swing too wildly.
India is also attracting more foreign money because of new measures by the government and the central bank.
The RBI also plans new polymer banknotes that last much longer than paper ones.
It wants to make loan interest rates more uniform across all banks it oversees.
A top SBI economist says most bank loans already use one benchmark, so standardising could help customers.
The RBI expects the rupee to strengthen further against the US dollar if West Asia tensions continue to ease.
The rupee recovered from a low of 96.90 on May 20 to close at 95.08, appreciating 1.9 per cent.
Governor Sanjay Malhotra said the central bank will let market forces set the exchange rate, intervening only to curb excessive volatility.
The RBI targets introducing polymer banknotes, which last three to four times longer than paper currency, from the start of the next fiscal year.
The RBI plans to standardise interest-rate frameworks on advances; 67.6 per cent of bank loans are now linked to the EBLR regime.
- Who
- Reserve Bank of India Governor Sanjay Malhotra, with supportive comments from SBI group chief economic adviser Soumya Kanti Ghosh and Indian Overseas Bank MD and CEO Ajay Kumar Srivastava.
- What
- The RBI said the rupee may strengthen further, announced plans to introduce polymer banknotes, and proposed standardising the regulatory framework for interest rates on advances.
- Where
- India; the rupee's value is measured against the US dollar, with easing West Asia tensions cited as a key factor.
- When
- Reported on a Wednesday, following the rupee's 1.9 per cent recovery from its May 20 low.
- Why
- Because geopolitical tensions in West Asia are de-escalating and recent capital-flow measures have improved India's external position, with a healthy balance-of-payments surplus expected this year.
Key facts
- Rupee close
- 95.08 per US dollar
- Rupee low (May 20)
- 96.90 per US dollar
- Rupee appreciation
- 1.9 per cent
- RBI Governor
- Sanjay Malhotra
- Polymer notes
- Last 3-4 times longer than paper; targeted for circulation at start of next fiscal year
- Bank loans linked to EBLR
- 67.6 per cent
- Balance of payments
- Healthy surplus expected this year
Quotes
Sanjay Malhotra
Governor of the Reserve Bank of India
“We will test and check how they perform in Indian conditions. If everything goes as per plan, we are targeting that they could be in circulation at the beginning of the next financial year.”
telegraphindia.com
“It is quite possible going forward, as the tensions and conflict de‑escalate, the rupee may further strengthen.”
telegraphindia.com
Sources
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