RBI governor Shaktikanta Das says will ensure orderly movement in rupee

The Reserve Bank of India (RBI) is for an orderly appreciation or depreciation in the currency and is intervening in all market segments to curb volatility, governor Shaktikanta Das said.

“We don’t have a level in mind, but our endeavor is to ensure there is orderly evolution of rupee in both ways,” Das said in a fireside chat at the Singapore Indian Chamber of Commerce and Industry’s event in the city-state on Tuesday. 

India’s currency has been on a downward spiral, falling 6.6% this year, as fears of a global recession and deteriorating external balances fuel outflows. The central bank, earlier this month, announced measures to help shore up its foreign exchange reserves that have declined to the lowest in more than 14 months at $588.3 billion as of July 1.

The rupee’s tumble to a succession of record lows is sparking fears of a deeper sell-off and pitting the central bank against analysts and strategists who are predicting further losses. 

The central bank is intervening across all segments of the foreign exchange market, whether spot, forwards or offshore, Das said. “As a central bank, we don’t like excessive volatility. Our dealing room guys decide the strategy on a minute to minute basis.”

The rupee declined 0.2% to 79.6025 to a dollar on Tuesday. It fell to another low of 79.6613 in intraday trade.

Das said the deficit in India’s current account -- the broadest measure of trade -- will stay manageable at below 2.5% of gross domestic product should oil average at $105 a barrel. India has seen nearly $30 billion of outflows from equities this year, prompting Das to say that whatever outflows that had to happen already happened.

On the RBI’s plan to settle overseas trade in the local currency, Das said it will help in the internationalization of the currency. 

Under the plan announced Monday, importers buying goods from abroad will make payments in the rupee, which will be credited to the special account of the correspondent bank of the partner country, while exporters will be paid from the balances in the designated special account, the RBI said.